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The Cycle of Volatility
Bank CEOs were constantly tracking their vars that they're valuating risk, but from the wrong way. When volatility is higher, you have to de-risk. And mostly it's low as we saw from April of 2020 till December of 2021. A buying a S and P 500 when the VIX is at 64 means it's going to move 4% in a day. It has the same exposure as being four times leveraged when the Vix is at 16. The more volatile things became the more money they would lose. Then it becomes the cycle where you have to trade less and less.