Many of us know the “January Effect," also referred to as the “January Barometer,” refers to the belief that equity market performance in the month of January will predict how the market will perform throughout the year. It appears to no longer work.
Effective September 15, 2014, The Chicago Mercantile Exchange, Inc. (CME), the Board of Trade of the City of Chicago, Inc. (CBOT), the New York Mercantile Exchange, Inc. (NYMEX), and the Commodity Exchange, Inc. (COMEX), notified the Commodity Futures Trading Commission (CFTC) of the adoption of Rule 575 (“Disruptive Practices Prohibited”).
You must be hedged for tail events. This is great for high-net-worth individuals who can allocate $1 million to a tail hedging strategy but what about an individual with only long equity exposure through his or her pension or 401K?