top of page


Updated: May 2

We often get the question of how we look at risks.

We mainly look at tail-end risks; risks that are unlikely to happen, but potentially have a massive (negative) impact. This is key in our risk management. And these risks can often start with small events that go unnoticed, until it is becoming a real problem.

We also look at smaller risks, that could give a (small) spike in volatility, of which we could benefit when we take our monthly positions. 

To scratch the surface and give you a little bit of an idea of what we are talking about, we address four risks that were present last month (please note, there were more risks that we looked at, but this is to just give an idea).

Risk 1: Small businesses ‘defaulting’ on rent

Event: 43% of small businesses in the US were unable to fully pay their rent in April, the highest share since March 2021.

Delinquencies were the largest among restaurants where 52% became delinquent in April. More than 50% of small businesses claim that now rents are higher than 6 months ago.

Risk: Defaults in loans is what basically caused the financial crises in 2008-2009.

Risk 2: Geopolitical risks

Event: Geopolitics is once again having an impact on investment decisions and risks are increasing, as is equity volatility. Yet under the hood, the stock market is absorbing the shock relatively well so far…

Risk: Geopolitical tensions and wars could escalate quickly with devastating (financial) consequences.

Risk 3: Global debt

Events: The IMF has warned the US that its massive fiscal deficits have stoked inflation and pose “significant risks” for the global economy. The fund said in its benchmark Fiscal Monitor that it expected the US to record a fiscal deficit of 7.1% next year — more than three times the 2% average for other advanced economies. It also raised concerns over Chinese government debt, with the country set to record a deficit of 7.6% in 2025 — more than double the 3.7% average for other emerging markets — as Beijing copes with weak demand and a housing crisis.

Meanwhile in the US: a record $8.9 trillion of federal public debt is set to mature in 2024.

 Risk: Defaulting on debt on a massive scale, how unlikely this may be, could send the world in a global credit crunch.

Risk 4: Indicators from trading and Technical Analysis (TA)

Events: After a fourth straight day of declines, just 27.6% of stocks in the S&P 500 remain above their 50-day moving averages. This breadth reading is much lower for five sectors: Real Estate (6.5%), Health Care (9.4%), Technology (15.4%), Financials (16.9%), and Consumer Discretionary (19.2%).

Only 65% of S&P 500 $SPX stocks are currently trading above their 200 Day Moving Average, the lowest level of the year.


And volume is building in SPX 5100 puts.

Risk: Many traders act according to Technical Analysis. Whether you believe in it or not, is irrelevant if half of the traders use it as their guidebook and could push stocks (sharply) downwards.

Sources: The Kobeissi Letter, Zerohedge, FT, Bespoke, Barchart, Bloomberg, Mayhem4Markets

5 views0 comments

Related Posts

See All


bottom of page