9 ms·

SEC Charges S&P Dow Jones for Failures Relating to Volatility-Related Index

206 points by epa 5y ago

hartator 5y ago
I am more disappointed about the TSLA situation. Leaving this company out of the SP500 until they were in the top 10 company in market cap. It was a very active decision when most people would assume the sp500 is a passive index. [edit] For clarification, TSLA already had 4 quarters of profit in September 2020 matching sp500 profit requirements but was still left out on a very active decision. [1] [1] https://www.bloomberg.com/news/articles/2020-09-04/tesla-falls-after-anticipated-s-p-inclusion-fails-to-materialize https://www.bloomberg.com/news/articles/2020-09-04/tesla-fal...
- AlotOfReading 5y ago
  Wasn't this the result of the profit criterion, not an active decision?
  - NicoJuicy 5y ago
    Correct. To be included in the S&P you need to be average quarterly profitable + your most recent quarter needs to be profitable.
  - hartator 5y ago
    TSLA was matching the profit criterion for a while but was left out because it was too dependent on gov incentives. Which is fine but it is an active decision. As they are not making this kind of arbitrage for other companies relying on gov interventions and gov policies as well.
    - stonogo 5y ago
      Which companies?
      - pvarangot 5y ago
        Not OP but maybe the defense contractors? Raytheon, Lockheed, General Dynamics and I think Teledyne are in the S&P 500.
        stonogo 5y ago
        Could be, but of those only Teledyne runs any real risk of losing profitability status as a result of scheduled ends of government incentives. I'm having a hard time finding out which companies OP could be referring to.
        ineedasername 5y ago
        Tesla was relying on direct subsidies to customers for purchasing a Tesla. That's a little different than government contracts or massive tax breaks.
  - Kranar 5y ago
    The S&P 500 is selected by a committee vote, so every inclusion is an active decision. There are hundreds of large companies excluded from it for arbitrary reasons, including Dell, Snapchat, Square and literally hundreds of others.
    - thaumasiotes 5y ago
      But your grandparent comment isn't complaining about an inclusion. Exclusion is almost always a passive decision, as it was in this case.
    - astrange 5y ago
      Yes, the S&P 500 is an active index. Its ETFs are passive because they only track that index.
- CapriciousCptl 5y ago
  Nothing worth being upset about here; stocks aren't eligible for inclusion to the S&P500 until they have a trailing 4 quarters of profit.
  - Kranar 5y ago
    This is not true, it's a recommendation but it's not a requirement: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me... At any rate, even if it were a requirement, Tesla satisfied it at the moment that it was excluded.
    - CapriciousCptl 5y ago
      Well, I'm not sure what you think you see or where you see it in that 45-page pdf. The S&P 1500 criteria are, for instance, on page 8 and refute what you're saying. On a quick glance I couldn't find the S&P 500 criteria in that, again, 45-page pdf without a page reference. Or you can look here[1] on page 2. [1] https://www.spglobal.com/spdji/en/documents/additional-material/sp-500-brochure.pdf https://www.spglobal.com/spdji/en/documents/additional-mater...
      - Kranar 5y ago
        >Well, I'm not sure what you think you see or where you see it in that 45-page pdf. It's not my responsibility nor is it even possible to find a reference to a claim that is false. If you claim that X is a requirement, I can't possibly cite a specific page that says "X is not a requirement" because it's not feasible to enumerate all things that are NOT requirements. All I can do is refer you to the list of requirements and ask you to point out which item in that list substantiates your position. That is what I've done by referencing that document which specifies the eligibility criteria and methodology and that's about the most anyone can do since it's generally not possible to prove a negative. Now you mistakenly believe that page 8 substantiates that claim, but it doesn't. What page 8 states is the following: >The sum of the most recent four consecutive quarters’ Generally Accepted Accounting Principles (GAAP) earnings (net income excluding discontinued operations) SHOULD be positive as SHOULD the most recent quarter. The use of the word "should" is as a recommendation, compared to the use of the word "must" which is used for criteria that is mandatory, for example on page 6: >The issuing company MUST have the following organizational structure and share type... Now being that it's a suggestion instead of a mandatory requirement, one would reasonably expect there to be an example that goes against that recommendation, and of course there are plenty but for a very recent example take CZR, which was just added to the S&P 500 in March of 2021 despite not having produced a profit since 2019. https://finance.yahoo.com/quote/CZR?p=CZR https://finance.yahoo.com/quote/CZR?p=CZR It doesn't fall under any of the exemptions either.
elliekelly 5y ago
This bug had serious real-world consequences for real people: https://www.reddit.com/r/tradeXIV/comments/7vi6oa/xiv_after_hours/ https://www.reddit.com/r/tradeXIV/comments/7vi6oa/xiv_after_...
- mherdeg 5y ago
  That subreddit reminds me I've been meaning to follow up on https://www.bogleheads.org/forum/viewtopic.php?t=288192 https://www.bogleheads.org/forum/viewtopic.php?t=288192 (outperforming the market by holding UPRO/TMF). Wish that person were still disclosing their returns over time.
  - smabie 5y ago
    Not sure if they outperform on a risk adjusted basis but both UPRO and TMF are 3x levered (55%/45% weight) A more fair comparison would be like 33% UPRO and 66% TMF. This would get you a portfolio that is similar to SPY, but with some leveraged treasuries on top. Regardless, bonds have done really well due to the drop in interest rates over the last 10 years and I doubt they can go any lower. Bonds will probably perform a lot worse in the future, unless the fed wants to try out negative rates (unlikely). Also you don't need them to disclose their returns, you can construct your own version: https://www.portfoliovisualizer.com/backtest-portfolio https://www.portfoliovisualizer.com/backtest-portfolio Edit: constructing the portfolio, it does seem to outperform SPY on a risk adjusted basis, with a Sharpe of 1.25 from 2010-2021. However, my caveat about bonds still stands.
    - quickthrowman 5y ago
      Agreed, long Treasurys has a low reward, high risk setup. Particularly if you believe the inflation narrative.
      - reducesuffering 5y ago
        The risk/reward in isolation isn’t useful, because the market has priced in and bid them up so to their favorable inverse correlation with equities the past 40 years. Assets are priced due to their usefulness in the risk/reward for a portfolio as a whole.
ericbarrett 5y ago
Layman question: Was there any arbitrage available to financial firms during the times the VIX was stale as a result of this “feature”?
- Kranar 5y ago
  No because this feature is nothing more a feed that distributes a numeric value, it's not a financial instrument that you can trade. There are products that track the VIX that can be traded, but the price of those products deviated from the value published by the S&P. Part of the complaint is that some people relied too much on this feed and got crushed thinking there was some arbitrage opportunity when there wasn't. Any remotely competent financial firm that trades off of the VIX calculates their own value for it.
  - elliekelly 5y ago
    In this case DJI specifically licensed the VIX data to Credit Suisse for the purpose of offering and listing a security - XIV. You’re right that there were (and are) other securities that track VIX or use VIX as a component calculation but what’s interesting here is the SEC’s focus on XIV specifically. It seems the language of the data license agreement (quoted and summarized in paragraph 19 of the SEC’s Order[1]) played a role in the SEC’s decision to go after S&P Dow Jones for the bad data. [1]https://www.sec.gov/litigation/admin/2021/33-10943.pdf https://www.sec.gov/litigation/admin/2021/33-10943.pdf
    - mortehu 5y ago
      Were the other products ETNs? For an ETF like SVXY, you are buying ownership of the underlying derivatives contracts. For an ETN like XIV, there is no underlying instrument, and you are buying exactly* the index value (which is why I bought XIV after the close that night, and it did not turn out well). *) Subject to counterparty risk
  - ericbarrett 5y ago
    Hmm, thank you. But didn’t that then create such opportunities since there was a knowledge differential between firms in the know and others (perhaps day traders)?
Amorymeltzer 5y ago
Interesting hn link from those days: A Tiny Hedge Fund Made 8,600% on a Vix Bet <https://news.ycombinator.com/item?id=16346175 https://news.ycombinator.com/item?id=16346175>
Black101 5y ago
Penny stocks often have unreal bid/asks after-hours and they are completely fake... could they do something about that too? As an example for today, look at ALPP... bid: $2.00, ask: $7.00 ... but is is messed up across the board... the real price is around $3.70 And I wish that they would also regulate cryptos because a couple of days ago the spread was $1000 on BTC so I tried to make some money but after I bought with Coinbase, they would not let me sell.
- smabie 5y ago
  Why is a wide spread fake? Market makers adjust width based on market conditions, nothing wrong with that. Regarding the CB $1000 spread, it occured due to an exchange outage I believe.
  - Black101 5y ago
    > Regarding the CB $1000 spread, it occurred due to an exchange outage I believe. Why would they let you buy and not sell? I bought and tried to sell and it didn't work so I bought again and tried to sell again and it still would not work... Coinbase is very manipulative so they should get regulated.
    - gruez 5y ago
      >Coinbase is very manipulative so they should get regulated. Ironic given that coinbase is one of the more regulated exchanges out there (the others being gemini and kraken). You can definitely go worse, eg. bitfinex or binance.
      - smabie 5y ago
        Binance is better than coinbase in pretty much everyway it matters (except regs I guess), but kraken and bitfinex are total shit shows.
      - Black101 5y ago
        no issues with Kraken yet (but I am mostly holding XMR on that exchange)... but every time bitcoin drops quickly, I have issues with Coinbase (ever since they existed)
cobrabyte 5y ago
Some people lost it all, and S&P DJI gets away with a paltry $9M penalty.
- deleted 5y ago
  [deleted]
- krono 5y ago
  Unfair, no doubt. But people who have lost everything in one go? That can only be the result of either grave incompetence/inexperience, or behavioural problems of the kind that don't go so well with trading. Whatever it was that made them put all their eggs in one basket, these people should not have been making - or even have been able to make - these trades in the first place.
  - madsbuch 5y ago
    This is a dangerous way to legitimate peoples loss. Not only is it encourages to put all you eggs in one basket, it is also society facilitated to do it with a 5, 10, 15 x gearing. Yes, I talk about real estate.
    - krono 5y ago
      Yes, it was rather late when I wrote that comment, but that's essentially what I was trying to say. Of course these people did this to themselves, but perhaps they shouldn't have been able to pile on this much risk, or even have had this type of trade available to them in the first place due to suffering from diagnosed mental health problems, or for having recently displayed behaviour that is indicative of addiction. The crypto exchanges are also ridiculous. 125x Leverage on Bitcoin, available to anyone who wants it with only a cursory ID check. Most of these apps are also plastered with ads for their own internal gambling products (e.g. "Battle to win, long vs short").
    - naveen99 5y ago
      It’s not really that much leverage if you go by lifetime earnings / savings potential. which is why you won’t get the same loan without a proportional w2 or otherwise taxable income.
gregwebs 5y ago
There is a new XIV-like ETF just launched called SVOL. It reduces the exposure level and hedges risk with options (XIV ended up collapsing!). https://www.simplify.us/blog/volatility-premium-harvesting-reimagined https://www.simplify.us/blog/volatility-premium-harvesting-r...
- dannyw 5y ago
  Interesting. Have read quite a bit about the construction, keen that it's approved and trading! It's a far cry from being "XIV-like" imo though. only 25% instead of 100% like XIV.
baby 5y ago
Why do anyone follow the dow jones? When I learned about it I was pretty surprised that it was only a handful of cherry picked company.
- anonu 5y ago
  You're referring to the DJIA which is not the subject of this thread...
anonu 5y ago
Lots of people mentioning the implications to XIV ETF. But i think more about the implications to index calculators. Basically it's a bad business to be in and there's no real value in doing so... That's the lesson to be learned here. The SEC got rid of the iopv for ETFs 2 years ago... At the behest of the industry. But ultimately the lack of transparency, even if it's temporarily wrong, is a net negative for the little guy. Edit: there's so much weirdness in this story. This is the first time I think the SEC has clamped down on a realtime index calculation agent. Also, why would the SEC go after them and not CS ... they're the ones responsible for selling securities to the general public.
wyldfire 5y ago
XIV is an inverse of the CBOE volatility index? So you could think of it as a "stability" index ETN? How different is a stability index from an index like S&P 500?
- croon 5y ago
  Absolutely no expert, but afaik stability is not about the market going up, but closer to a measure on how much the participants in the market agrees on where it's heading. It might often mean that it's more stable when an index like S&P 500 is going up, but I don't think you can compare them. I'm prepared to be heavily corrected by financial experts here.
latch 5y ago
Matt Levine provided context for anyone, like me, who have no idea what this is about: https://www.bloomberg.com/opinion/articles/2018-02-09/inverse-volatility-products-almost-worked https://www.bloomberg.com/opinion/articles/2018-02-09/invers...
cudgy 5y ago
It took more than 3 years for this charge and cease and desist to manifest … swift justice and decisive action at work.

206 points by epa 5y ago

I am more disappointed about the TSLA situation. Leaving this company out of the SP500 until they were in the top 10 company in market cap. It was a very active decision when most people would assume the sp500 is a passive index. [edit] For clarification, TSLA already had 4 quarters of profit in September 2020 matching sp500 profit requirements but was still left out on a very active decision. [1] [1] https://www.bloomberg.com/news/articles/2020-09-04/tesla-falls-after-anticipated-s-p-inclusion-fails-to-materialize https://www.bloomberg.com/news/articles/2020-09-04/tesla-fal...

AlotOfReading 5y ago
Wasn't this the result of the profit criterion, not an active decision?
- NicoJuicy 5y ago
  Correct. To be included in the S&P you need to be average quarterly profitable + your most recent quarter needs to be profitable.
- hartator 5y ago
  TSLA was matching the profit criterion for a while but was left out because it was too dependent on gov incentives. Which is fine but it is an active decision. As they are not making this kind of arbitrage for other companies relying on gov interventions and gov policies as well.
  - stonogo 5y ago
    Which companies?
    - pvarangot 5y ago
      Not OP but maybe the defense contractors? Raytheon, Lockheed, General Dynamics and I think Teledyne are in the S&P 500.
      - stonogo 5y ago
        Could be, but of those only Teledyne runs any real risk of losing profitability status as a result of scheduled ends of government incentives. I'm having a hard time finding out which companies OP could be referring to.
      - ineedasername 5y ago
        Tesla was relying on direct subsidies to customers for purchasing a Tesla. That's a little different than government contracts or massive tax breaks.
- Kranar 5y ago
  The S&P 500 is selected by a committee vote, so every inclusion is an active decision. There are hundreds of large companies excluded from it for arbitrary reasons, including Dell, Snapchat, Square and literally hundreds of others.
  - thaumasiotes 5y ago
    But your grandparent comment isn't complaining about an inclusion. Exclusion is almost always a passive decision, as it was in this case.
  - astrange 5y ago
    Yes, the S&P 500 is an active index. Its ETFs are passive because they only track that index.
CapriciousCptl 5y ago
Nothing worth being upset about here; stocks aren't eligible for inclusion to the S&P500 until they have a trailing 4 quarters of profit.
- Kranar 5y ago
  This is not true, it's a recommendation but it's not a requirement: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me... At any rate, even if it were a requirement, Tesla satisfied it at the moment that it was excluded.
  - CapriciousCptl 5y ago
    Well, I'm not sure what you think you see or where you see it in that 45-page pdf. The S&P 1500 criteria are, for instance, on page 8 and refute what you're saying. On a quick glance I couldn't find the S&P 500 criteria in that, again, 45-page pdf without a page reference. Or you can look here[1] on page 2. [1] https://www.spglobal.com/spdji/en/documents/additional-material/sp-500-brochure.pdf https://www.spglobal.com/spdji/en/documents/additional-mater...
    - Kranar 5y ago
      >Well, I'm not sure what you think you see or where you see it in that 45-page pdf. It's not my responsibility nor is it even possible to find a reference to a claim that is false. If you claim that X is a requirement, I can't possibly cite a specific page that says "X is not a requirement" because it's not feasible to enumerate all things that are NOT requirements. All I can do is refer you to the list of requirements and ask you to point out which item in that list substantiates your position. That is what I've done by referencing that document which specifies the eligibility criteria and methodology and that's about the most anyone can do since it's generally not possible to prove a negative. Now you mistakenly believe that page 8 substantiates that claim, but it doesn't. What page 8 states is the following: >The sum of the most recent four consecutive quarters’ Generally Accepted Accounting Principles (GAAP) earnings (net income excluding discontinued operations) SHOULD be positive as SHOULD the most recent quarter. The use of the word "should" is as a recommendation, compared to the use of the word "must" which is used for criteria that is mandatory, for example on page 6: >The issuing company MUST have the following organizational structure and share type... Now being that it's a suggestion instead of a mandatory requirement, one would reasonably expect there to be an example that goes against that recommendation, and of course there are plenty but for a very recent example take CZR, which was just added to the S&P 500 in March of 2021 despite not having produced a profit since 2019. https://finance.yahoo.com/quote/CZR?p=CZR https://finance.yahoo.com/quote/CZR?p=CZR It doesn't fall under any of the exemptions either.

elliekelly 5y ago

This bug had serious real-world consequences for real people: https://www.reddit.com/r/tradeXIV/comments/7vi6oa/xiv_after_hours/ https://www.reddit.com/r/tradeXIV/comments/7vi6oa/xiv_after_...

mherdeg 5y ago
That subreddit reminds me I've been meaning to follow up on https://www.bogleheads.org/forum/viewtopic.php?t=288192 https://www.bogleheads.org/forum/viewtopic.php?t=288192 (outperforming the market by holding UPRO/TMF). Wish that person were still disclosing their returns over time.
- smabie 5y ago
  Not sure if they outperform on a risk adjusted basis but both UPRO and TMF are 3x levered (55%/45% weight) A more fair comparison would be like 33% UPRO and 66% TMF. This would get you a portfolio that is similar to SPY, but with some leveraged treasuries on top. Regardless, bonds have done really well due to the drop in interest rates over the last 10 years and I doubt they can go any lower. Bonds will probably perform a lot worse in the future, unless the fed wants to try out negative rates (unlikely). Also you don't need them to disclose their returns, you can construct your own version: https://www.portfoliovisualizer.com/backtest-portfolio https://www.portfoliovisualizer.com/backtest-portfolio Edit: constructing the portfolio, it does seem to outperform SPY on a risk adjusted basis, with a Sharpe of 1.25 from 2010-2021. However, my caveat about bonds still stands.
  - quickthrowman 5y ago
    Agreed, long Treasurys has a low reward, high risk setup. Particularly if you believe the inflation narrative.
    - reducesuffering 5y ago
      The risk/reward in isolation isn’t useful, because the market has priced in and bid them up so to their favorable inverse correlation with equities the past 40 years. Assets are priced due to their usefulness in the risk/reward for a portfolio as a whole.

ericbarrett 5y ago

Layman question: Was there any arbitrage available to financial firms during the times the VIX was stale as a result of this “feature”?

Kranar 5y ago
No because this feature is nothing more a feed that distributes a numeric value, it's not a financial instrument that you can trade. There are products that track the VIX that can be traded, but the price of those products deviated from the value published by the S&P. Part of the complaint is that some people relied too much on this feed and got crushed thinking there was some arbitrage opportunity when there wasn't. Any remotely competent financial firm that trades off of the VIX calculates their own value for it.
- elliekelly 5y ago
  In this case DJI specifically licensed the VIX data to Credit Suisse for the purpose of offering and listing a security - XIV. You’re right that there were (and are) other securities that track VIX or use VIX as a component calculation but what’s interesting here is the SEC’s focus on XIV specifically. It seems the language of the data license agreement (quoted and summarized in paragraph 19 of the SEC’s Order[1]) played a role in the SEC’s decision to go after S&P Dow Jones for the bad data. [1]https://www.sec.gov/litigation/admin/2021/33-10943.pdf https://www.sec.gov/litigation/admin/2021/33-10943.pdf
  - mortehu 5y ago
    Were the other products ETNs? For an ETF like SVXY, you are buying ownership of the underlying derivatives contracts. For an ETN like XIV, there is no underlying instrument, and you are buying exactly* the index value (which is why I bought XIV after the close that night, and it did not turn out well). *) Subject to counterparty risk
- ericbarrett 5y ago
  Hmm, thank you. But didn’t that then create such opportunities since there was a knowledge differential between firms in the know and others (perhaps day traders)?

Amorymeltzer 5y ago

Interesting hn link from those days: A Tiny Hedge Fund Made 8,600% on a Vix Bet <https://news.ycombinator.com/item?id=16346175 https://news.ycombinator.com/item?id=16346175>

Black101 5y ago

Penny stocks often have unreal bid/asks after-hours and they are completely fake... could they do something about that too? As an example for today, look at ALPP... bid: $2.00, ask: $7.00 ... but is is messed up across the board... the real price is around $3.70 And I wish that they would also regulate cryptos because a couple of days ago the spread was $1000 on BTC so I tried to make some money but after I bought with Coinbase, they would not let me sell.

smabie 5y ago
Why is a wide spread fake? Market makers adjust width based on market conditions, nothing wrong with that. Regarding the CB $1000 spread, it occured due to an exchange outage I believe.
- Black101 5y ago
  > Regarding the CB $1000 spread, it occurred due to an exchange outage I believe. Why would they let you buy and not sell? I bought and tried to sell and it didn't work so I bought again and tried to sell again and it still would not work... Coinbase is very manipulative so they should get regulated.
  - gruez 5y ago
    >Coinbase is very manipulative so they should get regulated. Ironic given that coinbase is one of the more regulated exchanges out there (the others being gemini and kraken). You can definitely go worse, eg. bitfinex or binance.
    - smabie 5y ago
      Binance is better than coinbase in pretty much everyway it matters (except regs I guess), but kraken and bitfinex are total shit shows.
    - Black101 5y ago
      no issues with Kraken yet (but I am mostly holding XMR on that exchange)... but every time bitcoin drops quickly, I have issues with Coinbase (ever since they existed)

cobrabyte 5y ago

Some people lost it all, and S&P DJI gets away with a paltry $9M penalty.

deleted 5y ago
[deleted]
krono 5y ago
Unfair, no doubt. But people who have lost everything in one go? That can only be the result of either grave incompetence/inexperience, or behavioural problems of the kind that don't go so well with trading. Whatever it was that made them put all their eggs in one basket, these people should not have been making - or even have been able to make - these trades in the first place.
- madsbuch 5y ago
  This is a dangerous way to legitimate peoples loss. Not only is it encourages to put all you eggs in one basket, it is also society facilitated to do it with a 5, 10, 15 x gearing. Yes, I talk about real estate.
  - krono 5y ago
    Yes, it was rather late when I wrote that comment, but that's essentially what I was trying to say. Of course these people did this to themselves, but perhaps they shouldn't have been able to pile on this much risk, or even have had this type of trade available to them in the first place due to suffering from diagnosed mental health problems, or for having recently displayed behaviour that is indicative of addiction. The crypto exchanges are also ridiculous. 125x Leverage on Bitcoin, available to anyone who wants it with only a cursory ID check. Most of these apps are also plastered with ads for their own internal gambling products (e.g. "Battle to win, long vs short").
  - naveen99 5y ago
    It’s not really that much leverage if you go by lifetime earnings / savings potential. which is why you won’t get the same loan without a proportional w2 or otherwise taxable income.

gregwebs 5y ago

There is a new XIV-like ETF just launched called SVOL. It reduces the exposure level and hedges risk with options (XIV ended up collapsing!). https://www.simplify.us/blog/volatility-premium-harvesting-reimagined https://www.simplify.us/blog/volatility-premium-harvesting-r...

dannyw 5y ago
Interesting. Have read quite a bit about the construction, keen that it's approved and trading! It's a far cry from being "XIV-like" imo though. only 25% instead of 100% like XIV.

baby 5y ago

Why do anyone follow the dow jones? When I learned about it I was pretty surprised that it was only a handful of cherry picked company.

anonu 5y ago
You're referring to the DJIA which is not the subject of this thread...

anonu 5y ago

Lots of people mentioning the implications to XIV ETF. But i think more about the implications to index calculators. Basically it's a bad business to be in and there's no real value in doing so... That's the lesson to be learned here. The SEC got rid of the iopv for ETFs 2 years ago... At the behest of the industry. But ultimately the lack of transparency, even if it's temporarily wrong, is a net negative for the little guy. Edit: there's so much weirdness in this story. This is the first time I think the SEC has clamped down on a realtime index calculation agent. Also, why would the SEC go after them and not CS ... they're the ones responsible for selling securities to the general public.

wyldfire 5y ago

XIV is an inverse of the CBOE volatility index? So you could think of it as a "stability" index ETN? How different is a stability index from an index like S&P 500?

croon 5y ago
Absolutely no expert, but afaik stability is not about the market going up, but closer to a measure on how much the participants in the market agrees on where it's heading. It might often mean that it's more stable when an index like S&P 500 is going up, but I don't think you can compare them. I'm prepared to be heavily corrected by financial experts here.

latch 5y ago

Matt Levine provided context for anyone, like me, who have no idea what this is about: https://www.bloomberg.com/opinion/articles/2018-02-09/inverse-volatility-products-almost-worked https://www.bloomberg.com/opinion/articles/2018-02-09/invers...

cudgy 5y ago

It took more than 3 years for this charge and cease and desist to manifest … swift justice and decisive action at work.