Bank of America warns of a potential $163 billion forced selling risk in stocks, citing an 18-to-1 imbalance in systematic funds' capacity
The bank estimates that commodity trading advisers (CTAs) and volatility-control strategies retain only about $9 billion of buying capacity if stocks rise, but could generate up to $163 billion in forced selling if markets decline. This creates an 18-to-1 imbalance in favor of sellers. Citadel Securities, Deutsche Bank, and Goldman Sachs data also support the view that systematic strategies have rebuilt equity exposure to near-capacity levels, with September identified as a "tactical downside window."
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Disclaimer: This content reflects the author's personal views only and does not constitute investment advice.
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