Alpha Exchange Price is the Only Fundamental
17 snips
Nov 25, 2025 Recent declines in equity and crypto markets highlight the intriguing concept of price as the sole fundamental. Volatility has surged, leading to significant daily market moves. The discussion includes the implications of reflexivity, where price influences narratives and shapes investment behavior. Dean examines the vulnerability of AI stocks amid market corrections and explores Bitcoin's dramatic drawdown amid crowding concerns. He categorizes various sources of uncertainty affecting these markets, creating a compelling exploration of the current financial landscape.
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Elevated Vol And Expensive Insurance
- Volatility has risen since Oct 10 with one-in-three days moving over 1% and realized vol jumping from ~6.6% to ~15.8%.
- High implied vol vs realized (large VRP) makes buying options insurance materially more expensive and complicates hedging.
Price As The Primary Driver
- Price now acts as both outcome and driver: it creates wealth which shapes behavior and narratives, feeding back into fundamentals.
- This reflexivity means falling prices can erode confidence and turn narrative-driven assets vulnerable quickly.
Watch CDS And Correlation Metrics
- Put CDS levels and correlations on your risk dashboard to detect hidden credit and systemic stress in big tech names.
- Monitor the MAG7 CDS index and rising correlations as early warning signals of spillover risk.
