Hey Peter - A better search function with filters that will allow you to do just that is in the making. There's a lot of work in the background with tagging older videos and making sure the results we show for a search are the correct ones. Until this is done, I would encourage you to add shows to your viewing list. As this one is Expert View, add it here https://www.realvision.com/tv/shows/ and then everything that's new from this section will be displayed first on your RV dashboard. Same goes with other long-form interviews that you can choose their series from the above link.

Disagree, 30minutes spent of pontificating common sense. Still appreciate the content.

To Matthew P.: thanks for your feedback. I am always happy to answer specific questions about the macro landscape & trade construction on demand.

I agree. Great interview. And to me much of this is not common sense. Perhaps some videos could be labeled beginner/ intermediate/ advanced or something to help people understand the complexity of the content. I would put this intermediate or between beginning & intermediate personally which is perfect for me.

I thought this was one of the best interviews on RV. More Hari, less Mark Cuban.

A well-presented argument often sounds like common sense after it is made. The actual hedging is complex and not common sense, at least to me. DLS

Thanks Trenton, I'll look to shave my head and offer meditation lessons as a career Option B :-)

Audio book please @Hari K.

Good point ... Other danger areas are high yield ETFs, where there's a liquidity mismatch between the ETF and underlying cash bonds and bond ETFs in general. Redemptions will force selling of bonds that hardly trade.

☝️☝️☝️

Another fine question. Sorry that my response rate is slowing, but I have a few things on my plate. In the Second Leg Down book, I tried to argue that a wide variety of hedges would work during a systemic risk event. I basically showed that it was very unlikely for any 2 of the currency VIX, Treasury VIX and equity VIX to be well above normal without the other one at a "normal" level. So that gets you some of the way (if you buy this argument, you can hedge in the asset class where vol is cheapest). However, for things like the CHFEUR cross, this approach isn't going to work. I'm planning to apply research on fire sales to identify overowned and dangerous markets in the next book. It won't solve the "depegging" or localized Black Swan problem. The only advice for pegged currencies is: don't scale your position as 1/(realized volatility), as the realized vol vastly underestimates risk.

Sorry, a slight mis-statement in my post below. It's unlikely for 2 vol indicators to be very high and the other at an average level or below.

Increase in Fed liabilities ==> increase in deposits somewhere in the system ==> more bonds + cash ==> supply of equities proportionately lower than (bonds + cash). Add corporate buybacks & you get a scarcity of equities, whatever the valuations might suggest … http://www.philosophicaleconomics.com/2013/12/the-single-greatest-predictor-of-future-stock-market-returns/ is a great reference on this idea, not written by me. All the best, Hari

Thanks again, Hari. Terrific presentation! I was thinking along the lines of your explanation but assumed that assets & liabilities offset each other. I will look further. I expect what I am missing is the velocity of additional deposits in the system. Warmest regards.

I’ll second that question.

great follow up questions, thanks! the idea is roughly this: suppose a bank (any bank, not just the Fed) approves a loan. let's say a house is bought, 100% on loan. the bank then has a mortgage on its books (asset to the bank) and deposits the sale amount in the homebuilder's account (liability to the bank). assets and liabilities cancel out from the bank's perspective. however, deposits that can be put to use in buying something else (stocks, bonds or real investment) have increased. the loan increases the total size of the bank's balance sheet and deposits increase money to chase assets in the system, but as you say assets and liabilities offset. hope this helps! the danger zone is when credit is very large and starts to contract.

I don’t know if I buy that argument. QE was the buying of bonds via the creation of Fed money. Fed gets bonds Commercial bank gets reserves which they hold at Fed (usually) Ex holder of bonds gets deposits If anything, the argument could be made that QE reduced the supply of bonds, but even this would probably be false as the size was never large enough, and you can see this when you compare US 10 year YoY vs ISM or something similar. I don’t see how it changes the composition of public assets to make equities more scarce at all.

Viresh, I can see your point ... I have framed the portfolio selection as a choice between bonds OR cash (0 duration bond) and stocks, though. I'm lumping cash together with bonds. The philosophical economics article spells this out.

Hey Hari, thank you for responding!

Thank you fine sir

Gold is a hybrid inflation/Armageddon hedge play. If you believe that either a. the market is going to h*** in a handbasket or b. money will be pumped into the system causing currency devaluation with nothing in between, it's a great hedge. Tough to apply in intermediate situations. Thanks!

Same here, so thanks to your comment I will try to watch (or read the transcript; more fast & focused but lacking if charts are missing).

Hi Flavio, thanks again for your interest! I aim to please with these things. Re: humans vs models debate. I guess I wasn't very clear on this point. Models (good ones, in any case) beat humans in terms of consistency, aggregating huge amounts of data and testing for hidden structure. However, any inference engine has to change its rules more slowly than the data flows in. That's required for model stability. So if you've been in a long bull market, most models will find a way to get long equities and the longer the bull cycle, the more convinced a model will become that long equities is the right thing to do. You can try to get around this issue by de-trending data etc. but I think my argument is broadly correct. Is it any surprise that momentum is everywhere in the age of automation? Now the danger is that if there's a sudden regime shift (think "Flash Crash" or deleveraging), your model is going to be levered, long and wrong. Humans are generally quite good at identifying that something has structurally changed and more importantly, options allow you to take contrarian positions at low cost when expressing "out of favor" views. My point is that you can use programs to latch onto the way markets are currently moving, but are well served to add convex structures (read options) to account for regime shifts. Grazie!