Last week, the stock market had two days where it dropped 4% in one day. What happened and why? Has something changed in the economy? Do you need to check your 401(k)?

 

In this episode, I consult my Wall Street friend George McWilliams on his inside opinion on the big stock market moves. George is part of the next generation Wall Streeters otherwise known as ‘quants’; a brainy sort inclined towards the application of higher math in the finance world. He studied physics and math in school before jumping into an investment bank and then the buy-side as a fixed income analyst at a very large bond fund. We discuss the stock market move and the big culprit behind the move.

 

We touch on:

-What happened in the markets last week

-The value of having a long-term investing view over a short-term view

-The ironic opportunity to buy “at a discount” and get more aggressive when the market falls

-The natural tendency to get more defensive when the market falls

-How volatility spiked very quickly and drove market fear and selling

-What the VIX volatility index is

-The build-up of popularity in a trade betting against volatility

-How the short volatility trade worked and how it contributed to the mini-crash

 

Lastly, you can subscribe to The Post Money Plan podcast here.