Earlier today, we were delighted to report that after the biggest vol explosion in history, the world's largest hedge fund Bridgewater, went from urging traders to go all in as recently as January 23, to warning that a "bigger shakeout is coming."
It turns out that Ray Dalio wasn't the only fund to urge its broader client universe - and anyone else who cared to listen - to do one thing, while telling a select group of clients to do the opposite. As we noted on Saturday, in his latest Weekly Kickstat published on Friday, Goldman's chief equity strategist David Kostin essentially told clients to BTFD, suggesting that the correction was likely almost over, based on historical patterns.
Meanwhile, on the very same Friday, Brian Levine - co-head of global equity trading at Goldman Sachs - sent out an email to the investment bank’s bigger clients, in which he made a stunning prediction: the Buy the Dip Regime is now over.
In the email, first reported by the Financial Times, Levine writes that "Historically shocks of this magnitude find their troughs in panicky selling" and yet "I’ve been amazed at how little ‘capitulation selling’ we’ve seen on the desk . . . The ‘buy on the dip’ mentality needs to be thoroughly punished before we find the bottom."
And, more shockingly, the person in charge of the most important trading desk also said that “longer term, I do believe this is a genuine regime change, one where you sell-the-rallies rather than buy-the-dips."
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