Ponzi World (Over 3 Billion NOT Served)

The globalized economy is a colossal Ponzi Scheme in which the vast majority survive on the bread crumbs falling off the table. The possibility of 7 billion people achieving a consumption-oriented lifestyle is zero, so the World Bank conveniently set the poverty line at $1.25/day to legalize global slavery. As long as someone else's children are doing the suffering, it's "all good". Post-2008, this illusion was extended merely by plundering all future generations.

Wednesday, December 2, 2015

Volatility Explosion aka. Hotel Californication

Despite Skynet's best efforts, realized and implied (options) volatility keeps rising as the stock market falls apart sector-by-sector, stock by stock i.e. the storm beneath the Dow Jones Illusional Average...

The Black-Scholes option mispricing model uses historical volatility as a proxy for future volatility. Yes, for that they won the Nobel Prize, proving that Finance is 99% gambling and 1% Third grade math. Nevertheless, in periods when actual volatility is rising, due to 200 point Dow swings, then hedging becomes more and more expensive on the way to becoming impossible...

We've never seen this before
Historical volatility (red) aka. Standard Deviation 120 day moving average w/implied options volatility (VIX):

All because of the storm brewing beneath the calm surface...
% of S&P stocks above 200 dma:

Oil and oil volatility
Doh!