Invest Like the Best with Patrick O'Shaughnessy Chad Cascarilla – Update on Tail Risk - [Invest Like the Best, EP.165]
Mar 25, 2020
Chad Cascarilla, a seasoned investor who thrived during the global financial crisis, now leads Paxos, a trust company for crypto assets. He discusses the tail risks in today’s markets during the pandemic, emphasizing the need to be aware of lesser-known threats. Lessons from 2008 are highlighted, as well as insights on inflation and the importance of financial strategies that consider a balanced recovery. Chad also explores the unique strengths of the U.S. economy in comparison to others, offering a compelling view on future investment opportunities.
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Economic Fragility
- The US economy, highly leveraged and with asset prices at historical highs, faces a "100-year storm."
- This creates little resilience, necessitating unprecedented fiscal and monetary responses.
Crisis Comparison
- The current crisis differs from 2008, resembling a war or pandemic more than a typical financial crisis.
- Fast responses are crucial to prevent cascading feedback loops, unlike the slower responses of 2008.
Mortgage Servicer Risk
- Mortgage servicers, crucial for mortgage bond payments, face risks if stimulus excludes non-bank entities.
- Delays in aid could trigger systemic problems within months, highlighting the need for targeted and timely intervention.