Sentiment Extremes Have Investors Crowding Trades. These Experts See an Opportunity to Bet Against Them.

Volatility gauges such as the VIX have pulled back from recent extremes but remain elevated due to worries about the ongoing war in Iran. Goldman Sachs notes Middle East tensions have driven crowding into trades perceived as "working", raising positioning risk and the chance of abrupt repricing. Expect continued risk-off positioning and above-normal volatility that could pressure liquidity and correlations across markets.

Analysis

Volatility gauges such as the VIX have pulled back from recent extremes but remain elevated due to worries about the ongoing war in Iran. Goldman Sachs notes Middle East tensions have driven crowding into trades perceived as "working", raising positioning risk and the chance of abrupt repricing. Expect continued risk-off positioning and above-normal volatility that could pressure liquidity and correlations across markets.