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"THE SIGNS I SEE... ARE DISTURBING SIGNS" -Robert S. McNamara When asked by President Lyndon Johnson in March of 1964 about the state of affairs in Vietnam, Secretary of Defense Robert McNamara replied:       The frank answer is we don't know what is going on out there.  The signs I see coming through        the cables are disturbing signs.  It is a very uncertain period.  While I would certainly never trivialize the sacrifices made by the millions of soldiers, men, women and children in Southeast Asia during the Cold War and anti-colonial uprising, it may well be time to buckle up because the signs coming out of markets across numerous asset classes are lining up in disturbing order as well. EQUITIES Equity markets have been rocked by waves of selling that were compounded by automation, again, as short selling bots took out a leveraged inverse volatility ETN worth hundreds of millions of dollars in just a matter of hours. Whi...

"IF YOU THINK THIS IS OVER THEN YOU'RE WRONG" -Radiohead, 'Separator' Anyone who's ever inadvertently paid attention to an investment advisor commercial or bothered to read a mutual fund prospectus is familiar with the phrase, "past performance is not indicative of future results."  This is legal jargon for 'you can't sue us if we lose all your money.'  In reality, however, past performance is used ad nauseam to predict future results, especially in today's world of ubiquitous data driven models. Right now, past performance is indicating the blasts of selling and accompanying spikes in volatility in equity markets this past week do not appear to over.  Looking at past episodes of market turbulence, there are quantifiable trends that tend to indicate when a market has found its bottom.  Before we actually try to find the bottom of this market, let us first define a few key concepts of quantitative finance.  QUANTITATIVE FINANCE - 101 L...