American and European markets have lost some ground again in the past week. Most of the indices went out of the week with slight losses of around 3-4%. There is currently no special news from either the corona crisis or the markets themselves.
The crash protection risk model has now been partially confirmed on the status green. Due to the calming of the markets that has been going on for some time now, the risk of an imminent crash appears low according to the model. However, the economic outlook has not improved, and an increase in the number of infections could quickly turn the current calm into panic.
Despite a temporary all-clear, investors should continue to act very carefully in the current environment. A build-up of the equity quota can be accompanied by put hedges to protect against the scenario of sudden panic losses. In my opinion, there are still many negative records and black swans slumbering in this market
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Bertan Gueler, CFA