The Markets Can the Rally Continue?
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Oct 10, 2025 Ashok Varadhan, Co-Head of Global Banking & Markets at Goldman Sachs, offers keen insights on the recent equity rally and its sustainability. He assesses the fundamental support of the rally while flagging potential risks and the importance of diversification. Varadhan discusses using low volatility for hedging and the growing interest in gold and bitcoin as alternatives to fiat currency. He also addresses concerns surrounding a potential government shutdown and proposes staying invested while employing convex hedges such as index puts.
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Low-Vol Rally Masks Vulnerability
- The rally since April has been high quality because it rose with very little volatility.
- That low-volatility advance increases vulnerability to disappointment as much is priced in.
Remain Allocated To U.S. Equities
- Stay invested in the U.S. given favorable fundamentals and an ongoing rate-cutting cycle.
- Expect policy rates to normalize around 3% and potential fiscal tailwinds next year.
Crowded Views Aren't Always Crowded Bets
- Consensus opinions may be crowded but actual capital positions are often more cautious.
- That caution helps explain why the market can keep grinding higher despite crowded narratives.