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Back on January 30, just days before the first market correction that took place less than a week later in the February 5 VIXtermination event that wiped out the entire universe of volatility ETFs, we reported that Renaissance Technologies - one of the most profitable hedge funds of all time - warned that there is "significant" risk of a correction in prices and is preparing for "possible market turbulence."
In a letter to clients, Ed Hubner - RenTec's head of risk control - cautioned that while accelerating global growth, corporate tax reform and a business-friendly administration in the U.S. have contributed to market gains, "it’s not clear these factors justify current valuations, especially in light of sovereign debt levels."
Prediction - Surge - VIX - Hubner - Addition
Furthermore, in an eerie prediction of the imminent surge in the VIX, Hubner also warned that "In addition, the downward technical pressure on the VIX, due to the growth of strategies that bet against market volatility, and lower correlations within the S&P 500, shouldn’t be confused with unshakable economic calm."
Renaissasnce was founded by military code breaker Jim Simons.
Hubner - Fear - Concern - Equity - Investors
Hubner also noted that "while the fear of missing out may not be a concern for equity investors, increasing euphoria mixed with a bit of complacency certainly is" and that "Historically low levels of volatility may well have given investors a false sense of security in the...
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