• Profile picture of Seth Golden

    Seth Golden posted an update 4 years, 4 months ago

    So what happened to make the market decline today. We can certainly suggest headlines regarding tariffs & the subpar ISM data. But the reality is nothing caused the market decline, it was simply offered an excuse to do so and in order to work off some of the frothiness in market sentiment as well as valuation. How do we know the market declined and VIX spiked on nothing more than froth, well lets travel back to 2017, when the VIX had two bouts of 30%+ spikes. The first spike came with no headlines. The second one in August was literally during a Jeffrey Gundlach interview on CNBC where he called for the VIX to double and outlined that he had bought SPX puts. See charts and screen shot attached with link: “I think going long the VIX is really sort of free money at a 9.80 VIX level today,” Gundlach said. “I believe the market will drop 3 percent at a minimum sometime between now and December. And when it does I don’t think the VIX will be at 10.”

    The S&P 500 did not have a 3% decline at any point in 2017 and it actually surged through the entirety of December. Nonetheless, the day of this interview on CNBC, the market did fall based on this bet and VIX forecast. But again, the market just needed an excuse back then to work off some of the frothiness, as it does presently. https://www.cnbc.com/2017/08/08/billionaire-bond-guru-gundlach-predicts-he-will-make-400-percent-on-his-bet-against-the-stock-market.html

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