Forced Retirement Selling May Disrupt Santa Rally | Zed Francis
Zed Francis, chief investment officer at Convexitas, joins Jack to talk about interest rate risk, what really happened to the British pension system, and tail risk as a portfolio diversifier. Francis argues that December 2022 will see a wave of mandatory liquidations by the U.S. retirees forced to take mandatory distributions on their retirement accounts. These forced sales will be larger as a percentage of the typical 60/40 portfolio than they normally are, due to the drawdown in stocks and bonds that have already occurred this year. Filmed on November 8, 2022. -- Follow Jack Farley on Twitter https://rb.gy/uesguv Follow Forward Guidance on Twitter https://rb.gy/cy0dki Follow Blockworks on Twitter https://rb.gy/igyzsj About Convexitas: https://www.convexitas.com/ Convexitas’ piece on Liability-Driven Investment (LDI): https://www.convexitas.com/insights/liability-driven-investment-de-risking-if/ Convexitas’ piece on duration risk: https://www.convexitas.com/insights/rates-free-risk-duration-duration-everywhere/ __ Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://rb.gy/5weeyw Market commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos Find out more about the Blockworks video editor role here: https://blockworks.co/careers/ __ Timestamps: (00:00) Intro (00:33) The Financialization Of Everything (10:27) Private Markets (17:01) Duration (Interest Rate Risk) Explained (19:35) The Losses From Rising Rates Are Immense (26:26) The U.K. Pensions Crisis - Explained In Great Detail (38:41) Stocks and Volatility (41:53) "Ignore The VIX" (45:19) Tail Risk (50:47) Are Active Investment Managers Underweight Stocks? (01:00:07) The Different Phases of A Bear Market (01:07:46) The Credit Markets Are Frozen (01:10:21) A "Waterfall of Liquidations" Is Coming From Forced Selling From Retirement Accounts (01:19:45) The Value Of Portfolio Overlays (01:26:00) Basis Risk __ Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.