Two weeks back everyone was citing ACM and screaming "risk premiums are falling not rising." Where'd those people go now?
Relying on one model is dumb. But thinking premia were compressing then? Even dumber.
This is why you triangulate. One indicator tells you a story. The market tells you the truth. Risk premium debate is textbook recency bias — people anchor to whatever the last model spit out and ignore price action, vol structure, and positioning.
If you were long duration or short vol two weeks ago because ACM said so, you got run over. Markets don't care about your favorite model.
Relying on one model is dumb. But thinking premia were compressing then? Even dumber.
This is why you triangulate. One indicator tells you a story. The market tells you the truth. Risk premium debate is textbook recency bias — people anchor to whatever the last model spit out and ignore price action, vol structure, and positioning.
If you were long duration or short vol two weeks ago because ACM said so, you got run over. Markets don't care about your favorite model.