2020 Bear Market Demystified in Bullet Points

2020 Bear Market Demystified in Bullet Points

We have in the past argued that the market volatility, investors were observing during the last few years did not adequately represent the underlying risks.. There are a number of assets that provide protection in a risk off environment.. As equities sell off investors tend to flock to these assets.. US Treasuries historically have been the favored risk off assets.. The 10 Year Treasury yield fell to an all-time low of 0.32% on March 9th.. (See US Treasuries are Not A Safe Haven in a Bear Market ). The US Fed and other central banks around the world have done multiple cycles of monetary stimulus by lowering interest rates and buying assets, mostly government bonds.. Coming in the 2020 crisis, the Central Banks don't have the tools to ward off a recession.. As uncertainty in global markets rises and investors sell equities, gold provides downside protection.. We would use the volatility in gold from margin call liquidations to layer into longs..