Slow-Burn Minsky Moments - Sunday Roundup, July 16, 2023

GMO’s James Montier has a long thought piece about how he views market conditions as characterized by what he calls “slow burn Minsky moments” or systemic vulnerabilities. Montier argues that while holding cash or long volatility is the most obvious tail hedge, “running a long volatility strategy is the investment equivalent of death by a thousand cuts.” Instead he goes into some detail about how investors could employ a long quality/short junk strategy or a long value/short growth strategy, discussing sizing and other issues.