Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event_老虎社区_美港股上老虎

Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event

Marketwatch2021-10-05

U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history. Moreover,...

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170

bernardtayet
·2021-10-06
No worries. If you keep worrying, time to sell and wait for the crash if any soon. No one knows when.
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2
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- 滚股怪:
  Go for it
  2021-10-06
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SGboy
·2021-10-06
black swan’ event
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LionCaleb
·2021-10-05
Too volatile
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1
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財神發
·2021-10-05
Won
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1
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alexsander
·2021-10-05
good article
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1
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Longmanlee
·2021-10-05
Year end sales... Let's shopping
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2
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Mml
·2021-10-05
Informative
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3
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- kimC:
  In my point of view, volatility doesn't go with months, it goes with sentiment.
  2021-10-06
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DQ6
·2021-10-05
Shorts will say great chance for them but remember if a market crash, most people will lose their jobs and your dollar will be worthless. Your paid tax will also be use by government to save some banks or big ass company. So do pray market doesn't crash.
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4
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交流道的小赢熊
·2021-10-05
Buy when others are fearful [看涨]
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1
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Linda1127
·2021-10-05
Black Monday....Well... at least today is Tuesday... look at the bright side... haha
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8
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- Mml:
  Yup
  2021-10-05
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- 滚股怪:
  Oooop
  2021-10-05
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YCLim
·2021-10-05
Oh no
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4
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- JKGan:
  ok
  2021-10-06
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Val準凖
·2021-10-05
Good time to buy
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3
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Val準凖
·2021-10-05
Buy buy
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2
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LoneSurvivor
·2021-10-05
Whatever that goes down will always come back up. So stop whining like some lil’ kid oOoOooO market crash ooOoooOoo I’m shooooo scareddddd [Facepalm]
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5
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- Greg2021:
  well said beo
  2021-10-05
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- LoneSurvivor:
  Aiteee bet, the market aint suitable for paper hands
  2021-10-05
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LHHZ
·2021-10-05
[喷血]
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1
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Andrewinho
·2021-10-05
Black swan = Opportunity? 🤔
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1
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nctony
·2021-10-05
Noise, do you really think you could avoid? As a investor more or less fund will be trap when arrive. What to worry?
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4
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- 滚股怪:
  Money
  2021-10-05
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HeroSmurf
·2021-10-05
Scary……. 😅
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2
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Couch
·2021-10-05
Hi
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6
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- Aun9:
  Ya
  2021-10-05
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34730c19
·2021-10-05
Like pls
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7
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- ValAly:
  Loke
  2021-10-05
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- tomato9889:
  like
  2021-10-05
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- Jellywonka:
  Mice
  2021-10-05
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October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">网页链接</a>\n\n</div>\n","source":"market_watch","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".SPX","symbol_name":"S&P 500 Index","start_time":0,"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","article_id":"1121989111","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","pubTimestamp":1633417444,"columns":[],"sourceInfo":{"source_id":"market_watch","name":"华尔街大事件"},"weMediaInfo":null,"summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","collect":0,"end_time":0,"defaultTopTitle":"marketwatch.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"translate_title":"股市10月份波动的历史意味着是时候稳定自己以应对“黑天鹅”事件了","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9},"content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[{"id":829270894,"gmtCreate":1633521623744,"gmtModify":1633521624627,"author":{"id":"3583377018896117","authorId":"3583377018896117","name":"bernardtayet","avatar":"https://static.tigerbbs.com/43e8c1fc37a4bff2a94af98953cff267","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3583377018896117","authorIdStr":"3583377018896117"},"htmlText":"No worries. If you keep worrying, time to sell and wait for the crash if any soon.&nbsp;&nbsp;No one knows when.&nbsp;","listText":"No worries. If you keep worrying, time to sell and wait for the crash if any soon.&nbsp;&nbsp;No one knows when.&nbsp;","text":"No worries. If you keep worrying, time to sell and wait for the crash if any soon. No one knows when.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/829270894","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6112391,"gmtCreate":1633532326537,"gmtModify":1634720311894,"authorId":4091089381144950,"author":{"id":4091089381144950,"idStr":"4091089381144950","authorId":4091089381144950,"name":"滚股怪","avatar":"https://static.tigerbbs.com/b67621b4133ca0db91bff9766152a448","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":829270894,"type":1,"supId":0,"prevId":0,"content":"Go for it","text":"Go for it","html":"Go for it"}],"langContent":"CN"},{"id":829840017,"gmtCreate":1633490827779,"gmtModify":1633490828151,"author":{"id":"4093688471950400","authorId":"4093688471950400","name":"SGboy","avatar":"https://static.tigerbbs.com/53fad8dabfd576c90fe8050483aa504f","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"4093688471950400","authorIdStr":"4093688471950400"},"htmlText":"black swan’ event","listText":"black swan’ event","text":"black swan’ event","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/829840017","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820755247,"gmtCreate":1633438193996,"gmtModify":1633438194231,"author":{"id":"3575603660958830","authorId":"3575603660958830","name":"LionCaleb","avatar":"https://static.tigerbbs.com/cd1f09c16d128eda9b88de93cde62337","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3575603660958830","authorIdStr":"3575603660958830"},"htmlText":"Too volatile","listText":"Too volatile","text":"Too volatile","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820755247","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820723136,"gmtCreate":1633436118948,"gmtModify":1633436119590,"author":{"id":"4088201880010570","authorId":"4088201880010570","name":"財神發","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"4088201880010570","authorIdStr":"4088201880010570"},"htmlText":"Won&nbsp;","listText":"Won&nbsp;","text":"Won","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820723136","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820729609,"gmtCreate":1633436035576,"gmtModify":1633436035998,"author":{"id":"4093485445879440","authorId":"4093485445879440","name":"alexsander","avatar":"https://static.tigerbbs.com/74729d318355ddcc28103cafe6b6d677","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"4093485445879440","authorIdStr":"4093485445879440"},"htmlText":"good article&nbsp;","listText":"good article&nbsp;","text":"good article","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820729609","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820765585,"gmtCreate":1633435593610,"gmtModify":1633435593740,"author":{"id":"3577490230864593","authorId":"3577490230864593","name":"Longmanlee","avatar":"https://static.tigerbbs.com/666e2e5ae6ccc9d73e7d020e8b497df5","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3577490230864593","authorIdStr":"3577490230864593"},"htmlText":"Year end sales... Let's shopping&nbsp;","listText":"Year end sales... Let's shopping&nbsp;","text":"Year end sales... Let's shopping","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820765585","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820769068,"gmtCreate":1633434769649,"gmtModify":1633434770945,"author":{"id":"3584863771682470","authorId":"3584863771682470","name":"Mml","avatar":"https://static.tigerbbs.com/f24c9f80edf3964f1c5ee7b551e05463","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3584863771682470","authorIdStr":"3584863771682470"},"htmlText":"Informative&nbsp;","listText":"Informative&nbsp;","text":"Informative","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/820769068","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6104201,"gmtCreate":1633477062129,"gmtModify":1634720997651,"authorId":4087267509717010,"author":{"id":4087267509717010,"idStr":"4087267509717010","authorId":4087267509717010,"name":"kimC","avatar":"https://static.tigerbbs.com/d507a950b8322c8dd1fac8cb737f0eae","vip":1,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820769068,"type":1,"supId":0,"prevId":0,"content":"In my point of view, volatility doesn't go with months, it goes with sentiment.","text":"In my point of view, volatility doesn't go with months, it goes with sentiment.","html":"In my point of view, volatility doesn't go with months, it goes with sentiment."}],"langContent":"CN"},{"id":820784938,"gmtCreate":1633434407782,"gmtModify":1633434842597,"author":{"id":"3582894720985713","authorId":"3582894720985713","name":"DQ6","avatar":"https://static.tigerbbs.com/fa8d37bc40959d32453f15ca0e4178b4","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3582894720985713","authorIdStr":"3582894720985713"},"htmlText":"Shorts will say great chance for them but remember if a market crash, most people will lose their jobs and your dollar will be worthless. Your paid tax will also be use by government to save some banks or big ass company.&nbsp;So do pray market doesn't crash.&nbsp;","listText":"Shorts will say great chance for them but remember if a market crash, most people will lose their jobs and your dollar will be worthless. Your paid tax will also be use by government to save some banks or big ass company.&nbsp;So do pray market doesn't crash.&nbsp;","text":"Shorts will say great chance for them but remember if a market crash, most people will lose their jobs and your dollar will be worthless. Your paid tax will also be use by government to save some banks or big ass company. So do pray market doesn't crash.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820784938","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820781905,"gmtCreate":1633433531181,"gmtModify":1633433532024,"author":{"id":"3566284972281751","authorId":"3566284972281751","name":"交流道的小赢熊","avatar":"https://static.tigerbbs.com/ef065ddae505e347229c193751c11188","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3566284972281751","authorIdStr":"3566284972281751"},"htmlText":"Buy when others are fearful&nbsp;[看涨]&nbsp;","listText":"Buy when others are fearful&nbsp;[看涨]&nbsp;","text":"Buy when others are fearful [看涨]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820781905","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820783317,"gmtCreate":1633433350649,"gmtModify":1633433351639,"author":{"id":"4091084014142520","authorId":"4091084014142520","name":"Linda1127","avatar":"https://static.tigerbbs.com/547f587460e4f5c60a8b9c3ca9f05810","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"4091084014142520","authorIdStr":"4091084014142520"},"htmlText":"Black Monday....Well... at least today is Tuesday... look at the bright side... haha","listText":"Black Monday....Well... at least today is Tuesday... look at the bright side... haha","text":"Black Monday....Well... at least today is Tuesday... look at the bright side... haha","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":2,"repostSize":0,"link":"https://laohu8.com/post/820783317","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6099831,"gmtCreate":1633434788920,"gmtModify":1634721360605,"authorId":3584863771682470,"author":{"id":3584863771682470,"idStr":"3584863771682470","authorId":3584863771682470,"name":"Mml","avatar":"https://static.tigerbbs.com/f24c9f80edf3964f1c5ee7b551e05463","vip":1,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820783317,"type":1,"supId":0,"prevId":0,"content":"Yup","text":"Yup","html":"Yup"},{"id":6100140,"gmtCreate":1633437553884,"gmtModify":1634721336643,"authorId":4091089381144950,"author":{"id":4091089381144950,"idStr":"4091089381144950","authorId":4091089381144950,"name":"滚股怪","avatar":"https://static.tigerbbs.com/b67621b4133ca0db91bff9766152a448","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820783317,"type":1,"supId":0,"prevId":0,"content":"Oooop","text":"Oooop","html":"Oooop"}],"langContent":"CN"},{"id":820789711,"gmtCreate":1633433327279,"gmtModify":1633433328527,"author":{"id":"3570854002442844","authorId":"3570854002442844","name":"YCLim","avatar":"https://static.tigerbbs.com/3d379b5568f9232352aa09ded85fac76","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3570854002442844","authorIdStr":"3570854002442844"},"htmlText":"Oh no","listText":"Oh no","text":"Oh no","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/820789711","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6104167,"gmtCreate":1633476931363,"gmtModify":1634721000810,"authorId":3577494759333904,"author":{"id":3577494759333904,"idStr":"3577494759333904","authorId":3577494759333904,"name":"JKGan","avatar":"https://static.tigerbbs.com/918b0f86622cedc2f23e00ebe3ce6924","vip":1,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820789711,"type":1,"supId":0,"prevId":0,"content":"<u>ok</u>","text":"<u>ok</u>","html":"<u>ok</u>"}],"langContent":"CN"},{"id":820780623,"gmtCreate":1633433044498,"gmtModify":1633433045013,"author":{"id":"3581556348949722","authorId":"3581556348949722","name":"Val準凖","avatar":"https://static.tigerbbs.com/fc78ba8079eaf21b89d9286a3857c533","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3581556348949722","authorIdStr":"3581556348949722"},"htmlText":"Good time to buy","listText":"Good time to buy","text":"Good time to buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820780623","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820780182,"gmtCreate":1633433030964,"gmtModify":1633433031430,"author":{"id":"3581556348949722","authorId":"3581556348949722","name":"Val準凖","avatar":"https://static.tigerbbs.com/fc78ba8079eaf21b89d9286a3857c533","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3581556348949722","authorIdStr":"3581556348949722"},"htmlText":"Buy buy","listText":"Buy buy","text":"Buy buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820780182","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820715649,"gmtCreate":1633432693463,"gmtModify":1633432744265,"author":{"id":"3579266597292844","authorId":"3579266597292844","name":"LoneSurvivor","avatar":"https://static.tigerbbs.com/a82eb7b56f99eff92f30a4ece3e5c96c","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3579266597292844","authorIdStr":"3579266597292844"},"htmlText":"Whatever that goes down will always come back up. So stop whining like some lil’ kid oOoOooO market crash ooOoooOoo I’m shooooo scareddddd [Facepalm]&nbsp;","listText":"Whatever that goes down will always come back up. So stop whining like some lil’ kid oOoOooO market crash ooOoooOoo I’m shooooo scareddddd [Facepalm]&nbsp;","text":"Whatever that goes down will always come back up. So stop whining like some lil’ kid oOoOooO market crash ooOoooOoo I’m shooooo scareddddd [Facepalm]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":2,"repostSize":0,"link":"https://laohu8.com/post/820715649","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6099543,"gmtCreate":1633432723686,"gmtModify":1634721383444,"authorId":3568957285760850,"author":{"id":3568957285760850,"idStr":"3568957285760850","authorId":3568957285760850,"name":"Greg2021","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820715649,"type":1,"supId":0,"prevId":0,"content":"well said beo","text":"well said beo","html":"well said beo"},{"id":6099563,"gmtCreate":1633432796412,"gmtModify":1634721381499,"authorId":3579266597292844,"author":{"id":3579266597292844,"idStr":"3579266597292844","authorId":3579266597292844,"name":"LoneSurvivor","avatar":"https://static.tigerbbs.com/a82eb7b56f99eff92f30a4ece3e5c96c","vip":1,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820715649,"type":1,"supId":6099543,"prevId":0,"content":"Aiteee bet, the market aint suitable for paper hands ","text":"Aiteee bet, the market aint suitable for paper hands ","html":"Aiteee bet, the market aint suitable for paper hands "}],"langContent":"CN"},{"id":820718561,"gmtCreate":1633432249655,"gmtModify":1633432249806,"author":{"id":"4090903292078160","authorId":"4090903292078160","name":"LHHZ","avatar":"https://static.tigerbbs.com/8f049bd7d3dbb30cc720a7131ea0d0b2","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"4090903292078160","authorIdStr":"4090903292078160"},"htmlText":"[喷血]","listText":"[喷血]","text":"[喷血]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820718561","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820718201,"gmtCreate":1633432240555,"gmtModify":1633432241023,"author":{"id":"3581563418944392","authorId":"3581563418944392","name":"Andrewinho","avatar":"https://static.tigerbbs.com/3127e2bc40ab23064a5187a00a63e19b","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3581563418944392","authorIdStr":"3581563418944392"},"htmlText":"Black swan = Opportunity? 🤔&nbsp;","listText":"Black swan = Opportunity? 🤔&nbsp;","text":"Black swan = Opportunity? 🤔","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820718201","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820711043,"gmtCreate":1633432023639,"gmtModify":1633432025677,"author":{"id":"3557024931927052","authorId":"3557024931927052","name":"nctony","avatar":"https://static.tigerbbs.com/1449dfc5089ded0e8efe303fd4dd43b1","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3557024931927052","authorIdStr":"3557024931927052"},"htmlText":"Noise, do you really think you could avoid? As a investor more or less fund will be trap when arrive. What to worry?","listText":"Noise, do you really think you could avoid? As a investor more or less fund will be trap when arrive. What to worry?","text":"Noise, do you really think you could avoid? As a investor more or less fund will be trap when arrive. What to worry?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/820711043","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6099632,"gmtCreate":1633433429514,"gmtModify":1634721376508,"authorId":4091089381144950,"author":{"id":4091089381144950,"idStr":"4091089381144950","authorId":4091089381144950,"name":"滚股怪","avatar":"https://static.tigerbbs.com/b67621b4133ca0db91bff9766152a448","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820711043,"type":1,"supId":0,"prevId":0,"content":"Money","text":"Money","html":"Money"}],"langContent":"CN"},{"id":820719650,"gmtCreate":1633431677802,"gmtModify":1633431678003,"author":{"id":"3585642689958579","authorId":"3585642689958579","name":"HeroSmurf","avatar":"https://static.tigerbbs.com/6015b234d96461c6ef8db8d919ac3473","vip":1,"crmLevel":12,"crmLevelSwitch":0,"idStr":"3585642689958579","authorIdStr":"3585642689958579"},"htmlText":"Scary……. 😅","listText":"Scary……. 😅","text":"Scary……. 😅","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/820719650","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":820429933,"gmtCreate":1633418912068,"gmtModify":1633418912226,"author":{"id":"3581898537749965","authorId":"3581898537749965","name":"Couch","avatar":"https://static.tigerbbs.com/e5c9b82fccf054c247e5e431e45f3550","vip":1,"crmLevel":11,"crmLevelSwitch":0,"idStr":"3581898537749965","authorIdStr":"3581898537749965"},"htmlText":"Hi","listText":"Hi","text":"Hi","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":6,"commentSize":1,"repostSize":0,"link":"https://laohu8.com/post/820429933","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6099450,"gmtCreate":1633431675042,"gmtModify":1634721390719,"authorId":3575694115795487,"author":{"id":3575694115795487,"idStr":"3575694115795487","authorId":3575694115795487,"name":"Aun9","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820429933,"type":1,"supId":0,"prevId":0,"content":"Ya","text":"Ya","html":"Ya"}],"langContent":"CN"},{"id":820463764,"gmtCreate":1633417797418,"gmtModify":1633417797607,"author":{"id":"4088307590081180","authorId":"4088307590081180","name":"34730c19","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4088307590081180","authorIdStr":"4088307590081180"},"htmlText":"Like pls&nbsp;","listText":"Like pls&nbsp;","text":"Like pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":4,"repostSize":0,"link":"https://laohu8.com/post/820463764","repostId":1121989111,"repostType":4,"repost":{"id":"1121989111","kind":"news","pubTimestamp":1633417444,"share":"https://www.laohu8.com/m/news/1121989111?lang=&edition=full","pubTime":"2021-10-05 15:04","market":"us","language":"en","title":"Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event","url":"https://stock-news.laohu8.com/highlight/detail?id=1121989111","media":"Marketwatch","summary":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile m","content":"<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.</p>\n<p>Moreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.</p>\n<p>Those odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.</p>\n<p>Few investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.</p>\n<p>They are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.</p>\n<p>For example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).</p>\n<p>What you can’t conclude, however, is that the odds of a crash are zero.</p>\n<p>Why market reforms can’t prevent a crash</p>\n<p>You might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.</p>\n<p>For example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.</p>\n<p>Black swans</p>\n<p>Gabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?</p>\n<p>The investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.</p>\n<p>What might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.</p>\n<p>One possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&amp;P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&amp;P 500 put option that was 60% out of the money and with two years left before expiration.</p>\n<p>In this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&amp;P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.</p>\n<p>It won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.</p>","source":"market_watch","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStock market’s volatile October history means it’s time to steady yourself for a ‘black swan’ event\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-05 15:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2><strong>Marketwatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover,...</p>\n\n<a href=\"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://www.marketwatch.com/story/stock-markets-volatile-october-history-means-its-time-to-steady-yourself-for-a-black-swan-event-11633366226?siteid=yhoof2","is_english":true,"share_image_url":"https://static.laohu8.com/599a65733b8245fcf7868668ef9ad712","article_id":"1121989111","content_text":"U.S. stocks already are having a rough October — two trading days in. October is the most volatile month for stocks — and when stocks suffered their two worst crashes in U.S. market history.\nMoreover, there’s a 0.06% chance that the stock market this month will experience a one-day crash as bad as 1987’s Black Monday.\nThose odds don’t seem like much — but they are not zero. The Dow Jones Industrial Average DJIA, -0.94% tumbled 22.6% on Oct. 19, 1987, Black Monday. An equivalent percentage drop from its current level would take more than 7,700 points off the Dow in a single trading day.\nFew investors in the market nowadays remember the trauma of Black Monday. Those who do may reassure themselves that a similar crash couldn’t happen today, given market reforms that were instituted in the wake of the selloff.\nThey are kidding themselves, according to a study conducted by Xavier Gabaix, a professor of economics and finance at Harvard. He and his-coauthors derived a formula that predicts the frequency, over long periods of time, of large daily swings in the market. Upon testing the formula against hundreds of years of stock market returns in both the U.S. and around the world, they found the formula to be impressively accurate.\nFor example, Gabaix’s formula predicts that a 22.6% drop in the market will occur every 150 years, on average, over long periods of time. That doesn’t mean such a crash will occur every 150 years, since this predicted frequency is an average over extremely long periods. So the market could experience no such crash over a 150-year period, or experience two of them (or more).\nWhat you can’t conclude, however, is that the odds of a crash are zero.\nWhy market reforms can’t prevent a crash\nYou might object to this conclusion on the grounds that market reforms instituted since 1987 will prevent another crash from occurring — circuit breakers, trading halts and other safeguards. But, as Gabaix has explained to me many times in interviews over the years, such reforms are powerless to prevent a crash. That’s because all markets are dominated by their largest investors, and when many of them want to get out of the market simultaneously, for whatever reason, the market will crash.\nFor example, even if trading halts and other restrictions succeed in preventing these large investors from selling on U.S. exchanges, they can still sell on foreign exchanges where many U.S. stocks also trade. They can also sell short with stock index futures contracts or via the purchase of put options. You’re kidding yourself if you think these large investors will be prevented from getting out if they want to.\nBlack swans\nGabaix’s research underlines why it’s so important to prepare for so-called black swan events like market crashes that are sudden, awful, unpredictable and rare. Notice that, by this definition, they are unpredictable, so it’s false comfort to believe you can anticipate future black swans in time to reduce your portfolio risk and thereby sidestep a market crash. Did you foresee the COVID-induced bear market in time to avoid big losses?\nThe investment implication is to make changes to your portfolio that will protect you from a crash, if and when it occurs. It’s like buying fire insurance on your house. Most of you will not ever have your houses burn down, but that’s not a reason forego fire insurance. I doubt any of you complain about having to purchase such insurance, since the downside risk of losing everything is sufficiently awful.\nWhat might be the functional equivalent of fire insurance for your stock portfolio? I discussed several different possibilities in acolumn this summer, and I direct your attention to it.\nOne possibility is to regularly allocate a small percentage of your portfolio to long-dated, out of the money put options on the S&P 500SPX,-1.30%.In my previous column on this subject, I reported on one such strategy that each year allocated 3.33% to an S&P 500 put option that was 60% out of the money and with two years left before expiration.\nIn this particular case, your portfolio’s “fire insurance” carries a premium of 3.33% per year. That doesn’t seem prohibitive, especially since in backtesting back to 2006 this strategy beat the S&P 500 itself. So over this particular period there was no net cost to your insurance. Not bad.\nIt won’t always work out this well, of course, and this is not the only black swan strategy. But it gives you an idea. The anniversary of the two worst crashes in U.S. market history is an excellent time in which to consider insuring your portfolio against black swans.","news_type":1,"symbols_score_info":{".DJI":0.9,".SPX":0.9,".IXIC":0.9}},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":6098108,"gmtCreate":1633417916828,"gmtModify":1634721488138,"authorId":3562707747643111,"author":{"id":3562707747643111,"idStr":"3562707747643111","authorId":3562707747643111,"name":"ValAly","avatar":"https://static.tigerbbs.com/9d97b7d80605b322b36bcb7e5b0dff4f","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820463764,"type":1,"supId":0,"prevId":0,"content":"Loke","text":"Loke","html":"Loke"},{"id":6098110,"gmtCreate":1633417949323,"gmtModify":1634721488030,"authorId":3556062842827086,"author":{"id":3556062842827086,"idStr":"3556062842827086","authorId":3556062842827086,"name":"tomato9889","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820463764,"type":1,"supId":6098108,"prevId":0,"content":"like","text":"like","html":"like"},{"id":6098120,"gmtCreate":1633417999748,"gmtModify":1634721487378,"authorId":3570614147611531,"author":{"id":3570614147611531,"idStr":"3570614147611531","authorId":3570614147611531,"name":"Jellywonka","avatar":"https://static.tigerbbs.com/b9774fac6cdbae1bac77d81d9922fb02","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820463764,"type":1,"supId":0,"prevId":0,"content":"Mice","text":"Mice","html":"Mice"},{"id":6098199,"gmtCreate":1633418908870,"gmtModify":1634721482463,"authorId":3581898537749965,"author":{"id":3581898537749965,"idStr":"3581898537749965","authorId":3581898537749965,"name":"Couch","avatar":"https://static.tigerbbs.com/e5c9b82fccf054c247e5e431e45f3550","vip":1,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":820463764,"type":1,"supId":0,"prevId":0,"content":"Hi","text":"Hi","html":"Hi"}],"langContent":"CN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":170,"commentSize":20,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"isCrawlerRequest":true}