Need To Look At Buffer ETFs

Last week, the S&P 500 fell more than 4%, the Russell 2000 declined

by more than 6% and long-term Treasuries lost 1%. In fact, as I noted 

on Twitter this past Saturday, it was the 2nd consecutive week where 

the two equity indices fell by at least 4% and long-term Treasuries lost 

1%. The only other time over the past two decades that this happened 

was earlier this year in June. It’s goes without saying that these are 

highly unusual times. The Fed is raising rates even more aggressively 

into a steadily deteriorating economy and that’s resulted in some hefty 

losses for both stocks and bonds. Both asset classes are down between 

20-30% year-to-date. In a garden variety recession, this is the area where 

stock prices tend to bottom out - losses in the 20-30% range. It’s in 

recessions that are the result of some type of tail risk event that we see 

declines in the 40-50% range. Think the financial crisis or tech bubble. 

The big question now is will history show that this is a typical recession or 

an unusual recession. My money is on the latter, but nobody knows for sure. 

We do know that portfolio protection is rapidly on the rise. Put option volume 

on the S&P 500 this year is going vertical and investor sentiment is at 

historically bearish levels. If you’re a believer that the bottom isn’t yet in and 

there’s more downside ahead, it’s time to think of portfolio protection yourself.