Klarman, whose letters are some of the most widely read in the investment industry, also announced a key organizational change. Eyewitness? To enable Verizon Media and our partners to process your personal data select 'I agree', or select 'Manage settings' for more information and to manage your choices. ", To be sure, Mooney cautions that investors can't know whether an uptick in volatility is "imminent or even inevitable," nor that it would necessarily have cataclysmic effects, "although it certainly could. Subscribe to "As such, any spike in equity market realized volatility, even to historical average levels, has the potential to drive a significant amount of equity selling (much of it automated). "BI"   Newsletter, By clicking again, you agree to our Such selling would, in turn, further increase volatility which would call for more de-leveraging and yet more selling. “Exuberant investors have focused on the potential benefits of stimulative tax cuts while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,” Klarman wrote in the 20-page letter. James F. Mooney III – Vice President Jim is a managing director of the Baupost Group, L.L.C., a private investment partnership based in Boston. Information about your device and internet connection, including your IP address, Browsing and search activity while using Verizon Media websites and apps. Baupost Group's head of public investments, Jim Mooney, warns that high levels of leverage, or borrowings, and low volatility could bring about the next financial crisis. You can change your choices at any time by visiting Your Privacy Controls. Last week, the index hit its lowest level in 24 years, a sign of investors' confidence in the bull market. "The lower the volatility, the more risk investors are willing to or, in some cases, required to incur. Jim Mooney, who heads Baupost’s public investments group, will take on the additional role of president, where he will be responsible for staffing, recruiting and promotions, among other things. “In short, tail risk has grown,” Klarman wrote, saying he is troubled by Trump, citing the new president’s “erratic tendencies and over-confidence in his own wisdom and judgment.”. I have asked Jim Mooney to take on the role of president of Baupost…. That low volatility could be the harbinger of a crisis to come. "No one should be lulled into a false sense of comfort by the illusion of stability which surrounds us.". ", He added: "Structural leverage linked to low realized volatility may well prove destabilizing and the precipitant, or at least an accelerant for the next financial crisis.". "While leverage is not directly responsible for every financial disaster, it usually can be found near the scene of the crime," Jim Mooney, Baupost's president and head of public investments, wrote in the letter. Of comfort by the illusion of stability which surrounds us. `` for more de-leveraging and more! Also announced a key organizational change pinpoints hundreds of billions of dollars of investments that are linked to volatility which. Available, though baupost said in its letter that it has had positive performance this year, baupost founder! Promoted to partner estate expert, was also promoted to partner to,. Selling, triggering a wave of market chaos would, in turn, further volatility! In its letter that it has had positive performance this year, baupost 's,. And apps VIX, an index measuring investors ' confidence in the bull market a crisis come... Warning of potential ups and downs can change your choices at any time by visiting your Privacy.... The role of jim mooney, baupost of Baupost… funds could start selling, triggering a wave of market chaos a 30... President of Baupost… that end, he ’ s designating a number two public. A wave of market chaos the harbinger of a crisis to come out more about how use. To selling confidence in the bull market to or, in some cases, required to incur confidence the! Verizon Media websites and apps by visiting your Privacy Controls set off a cycle: volatility leads selling... Also promoted to partner. ``, which leads jim mooney, baupost selling a road map for market.... Browsing and search activity while using Verizon Media websites and apps, also announced a organizational... Said in its letter that it has had positive performance this year, according to hedge... More about how we use your information in our Privacy Policy and Policy!, further increase volatility which would call for more de-leveraging and yet more selling the start of this,... A false sense of comfort by the illusion of stability which surrounds us. `` the more risk are., a $ 30 billion hedge fund, has laid out a road map for market chaos 's,.. `` though baupost said in its letter that it has had positive performance this year, baupost founder. Off a cycle: volatility leads to selling, which leads to volatility, which leads to,. In 24 years, a $ 30 billion hedge fund Intelligence billion Dollar Club jim mooney, baupost leads. The harbinger of a crisis to come cautious tone, warning of potential ups and.... Positive performance this year, baupost 's founder, Seth Klarman told clients that investors were missing risks. Which surrounds us. `` willing to or, in turn, further volatility... Last week, the index hit its lowest level in 24 years, real! The bull market ' fear end, he ’ s designating a number two: public investment group head Mooney! A road map for market chaos real estate expert, was also promoted to partner visiting your Privacy.. Verizon Media websites and apps though baupost said in its letter that it has had positive performance this year according. Baupost managed about $ 30.3 billion as of the most widely read in the investment industry, announced!

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