What to Worry About in This Surreal Bull Market
Illustration: Atelier Olschinsky for Bloomberg Markets
Equities keep hitting record highs and volatility hovers near historic lows, all while geopolitical tensions abound. As a surreal bull market staggers onward, Bloomberg Markets asked around for reasons to worry.
When you look back at the financial crisis, the quants stand out as the canary in the coal mine. Model-driven funds experienced massive losses in August 2007—a full year before the rest of the financial system came to its knees. The event, dubbed the Quant Quake, may have resulted from one large liquidation: Leveraged quant funds pursuing similar bets then unwound at an unprecedented clip. AQR Capital Management, a $208 billion quantitative money manager, was among them, and the experience left some lingering bruises—and worries about the future.