Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Tail Risk What a week. The WCLD index dropped >10% over the last week, and yesterday coming off of the CPI release the S&P swung >5% from it’s intraday low to intraday high (this is one of the largest intraday swings since the crazy volatility at the onset of Covid in March 2020). Furthermore, the S&P broke below its June lows to hit a new 1 year low. As I was reflecting on what’s driving the current market sentiment what I kept coming back to was tail risk. Right now, it feels like tail risk is back on the table. Tail risk describes the potential of a rare event, as predicted by a probability distribution (mathematically this is generally a move of 3 standard deviations outside the mean).
Nice article as usual Jamin!. Yesterdays market action was rather odd…..every stock turned almost on queue at approx 11:15 am. Don’t fully appreciate why, maybe quants programmatic trading. But for sure volatility like that is rarely predictive of stability in the market and perhaps directly implicates the long tail as you suggest. Just wonder what the massive amount of programmatic trading does to any thesis?
Another great report. When tail events are on the table, its informative to look at multiples over a very long period to identify the lowest trading range. Love to see Saas multiples over a 20 year period and understand the valleys.
Nice article as usual Jamin!. Yesterdays market action was rather odd…..every stock turned almost on queue at approx 11:15 am. Don’t fully appreciate why, maybe quants programmatic trading. But for sure volatility like that is rarely predictive of stability in the market and perhaps directly implicates the long tail as you suggest. Just wonder what the massive amount of programmatic trading does to any thesis?
Another great report. When tail events are on the table, its informative to look at multiples over a very long period to identify the lowest trading range. Love to see Saas multiples over a 20 year period and understand the valleys.