We need to build a better financial system

I preface this by saying I thought stocks got ahead of themselves a month ago (and I have a time stamped post attesting to that). I did not predict corona. And I think from a fundamental standpoint US equities have lost about 4% of their value from a fundamental standpoint using a dcf

But something is wrong with how our markets functions. I said the same thing when we had the vix explosion and the dec 2018 crash. Those times I saw little economic data weakness and volatility way above what I would expect.

Now we have a real crisis with the same market structure and it’s making the real crisis far worse.

I traded the financial crisis. Made a lot of money. Our markets did not function like this. Back then we had the federal reserve and congress act extremely slow. Now we are doing entire years worth of qe in days. Policy tools that did work. Stimulus magnitudes bigger.

Since the last crisis we fixed our banks. They are well capitalized for this. But something’s gone wrong with our public markets. They can’t function in crisis. I blame it on turning the markets over to physicist. It builds up leverage when vol is low and then everyone has to derisks at the same time. We have fewer Bill millers and Buffetts looking at the situation and assessing value and far more cliff asnes types. There’s a reason this board loves private equity because they can place long term bets. I hated the fact Tesla rallies from 150 to 1000. Guys running momentum factors. Maybe it’s robin hood too and millennial idiocy. But quant styles seem like they play up on some natural human behaviors and make the extremes more pronounced. And now that we need a functioning financial system to work as we go into quarantine it’s completely broken.