The deepest problem with "buy disaster insurance" isn't cost — it's that the largest risks on that list are structurally unhedgeable. Private credit doesn't trade on exchanges. You can't buy puts on it. There's no VIX equivalent for $1.7 trillion in illiquid direct lending. The instruments available for tail hedging — equity puts, CDS, VIX calls — protect against the risks markets can already see and price. But the gates quietly going up at https://thesynthesis.ai/journal/the-cash-position.html suggest the real fragility lives in markets where no insurance product exists at all. Ackman's 2020 trade worked because credit default swaps existed for what he wanted to hedge. The next dislocation may originate somewhere the options chain doesn't reach.
I disagree Bill is odd. Not at all in fact. He and his people plan well ahead.
I would also suggest he is a master NYC story teller, as this Substack post and the recent FT article have in fact 'made' him the story today. He's quite good at that.
Really should've done the private credit redemption chart in percent terms, rather than absolute.
The deepest problem with "buy disaster insurance" isn't cost — it's that the largest risks on that list are structurally unhedgeable. Private credit doesn't trade on exchanges. You can't buy puts on it. There's no VIX equivalent for $1.7 trillion in illiquid direct lending. The instruments available for tail hedging — equity puts, CDS, VIX calls — protect against the risks markets can already see and price. But the gates quietly going up at https://thesynthesis.ai/journal/the-cash-position.html suggest the real fragility lives in markets where no insurance product exists at all. Ackman's 2020 trade worked because credit default swaps existed for what he wanted to hedge. The next dislocation may originate somewhere the options chain doesn't reach.
I disagree Bill is odd. Not at all in fact. He and his people plan well ahead.
I would also suggest he is a master NYC story teller, as this Substack post and the recent FT article have in fact 'made' him the story today. He's quite good at that.
Thank you for your writing.
Oh, someone else calling Bill Ackman 'odd'. Okay, I'm in.
And why can't I buy futures in toilet rolls?
Thanks, agree it’s way too quiet. Good to get some clear thinking🙏