All central banks are poised to catch up with Japan & Switzerland…. All the obvious hedges against stock-market volatility—Treasurys, gold, bitcoin and the VIX volatility index—stopped working in September

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September hurt shareholders, not only because stocks fell but also because the things they’d bought to protect their portfolios also fell. From the S&P 500’s high on the 2nd of the month, stocks, Treasurys, gold, bitcoin and the VIX volatility index all dropped.

This total failure of hedging is unusual, but investors need to get used to the idea that Treasurys no longer provide the ballast for a portfolio.

It wasn’t just the normal pattern of asset returns that broke down. Within the stock market the correction in Big Tech upended many of the reliable ways to minimize losses. High-quality stocks, companies with strong balance sheets and reliable profits, fell by more than the market. Smaller companies beat bigger companies.

Within the S&P 500, cheap or “value” stocks outperformed, although they still lost money. But while Big Tech-dominated growth stocks lost out among large companies, among small companies growth beat value. Sector performance followed no discernible pattern either. And stocks that normally rise and fall faster or slower than the market, known in market jargon as high or low beta, didn’t behave predictably.

Now the froth has been blown off the big disruptive growth stocks, we can hope that the normal market relationships will reassert themselves. But the biggest hedge against losses, Treasurys, probably won’t be back as a useful tool for years, if ever.

www.wsj.com/articles/theres-no-place-to-hide-anymore-when-the-stock-market-plunges-11601717401

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