Description

Michael and his co-authors David S. Dierking, CFA and Matthew Bowler, propose that it is possible to achieve significant alpha compared to the S&P 500 Index by flipping the traditional market “wisdom” of investing in defensive sectors in periods of high market volatility, and instead, overweighting cyclical sectors.  In their paper, Gayed, Dierking, and Bowler approach sector allocation from a mean reversion perspective with the VIX as the trade trigger. Short-term spikes in the CBOE Volatility Index, better known as the VIX, can create aggressive mispricing from severe panic states. Michael will discuss how opportunity for market outperformance is possible for the trader who is willing to buy into panic, cyclical sectors, such as Technology, Industrials, Materials and Consumer Discretionary.