Volatility is the "problem". Too many investors, including large pension funds, have been shorting volatility in search of a steady return; many have even been naked shorting volatility because under the Fed's policies since 2008, volatility has essentially disappeared from the markets. Now volatility has returned in a big way and everyone who shorted it is deep underwater. Shorting volatility was not just a one-time trade for these people, it was the backbone of their whole investing strategy, essentially an endless "free" source of return. Now it's no longer a return, no longer free, and may take the whole ship down.

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