The Contrarian Investor Podcast
Nathaniel E. Baker
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There's Still Time to Hedge Tail Risk -- At Least for Stocks: Kris Sidial
A ‘highlight clip‘ of actionable items from this podcast was released to premium subscribers on Oct. 17 -- one business day after it was recorded. Become a premium subscriber by signing up here or on our Substack to take advantage of this and a host of other benefits. Kris Sidial of The Ambrus Group joins the podcast to discuss tail-risk hedging: how it works, why it's important, and how investors can still take advantage of volatility mispricings to protect themselves against further downside -- at least in stocks. Content Highlights What is tail risk hedging? (3:19); Traditional hedges haven't worked, starting with the 60:40 approach. How might investors hedge stock and bond exposure? (6:15); There are numerous options for investors to protect against downturns. But it's not always as easy as buying put contracts on indexes (8:24); Variance swaps, one way to compound returns on movements in volatility (10:25); Thoughts on UK pensions and what might have caused issues in that segment of the market (15:27); What investors are doing in this environment in terms of tail-risk hedging -- there are still opportunities to hedge (20:02); Background on the guest (30:08); Discussion of systemic risk as a result of the layers of options trades and counterparties: "There is a systemic hazard taking place right now in the derivatives market" (39:32); Speaking of risk, what about the regulatory environment? Are regulators asleep at the switch? Reasons to believe Dodd-Frank is perhaps not as effective as people think.. (43:37) Thoughts on cryptocurrencies (50:01). More About Kris Sidial Website: Ambrus.Capital; Twitter: @KSidiii;; White paper mentioned in the episode.
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