28 October 2015
Another one bites the dust
In a recent post "Are we dealing with a simple normalization of risk, or an exaggerated movement?", I underlined that the violence of the August and September equity markets correction could be explained by the overcrowded positioning of investors, forced by the quantitative easing policies led by central banks across the board to invest in the same asset classes with a worrying lack of heterogeneity.
This analysis was made from a top down/cross asset perspective. But recent events at the bottom up level bring another illustration of the extreme positioning of investors in the stock market. The events I refer to are related to the sudden and violent correction observed in momentum stocks during the first half of October. As a reminder, momentum stock picking consists in investing in the highest return stocks, with a view that they will keep on outperforming the market in the future.
Read the analysis of Emmanuel Bourdeix, Co-CIO NAM, Head of Seeyond