Cem Karsan Is Calling for a 25 to 40% Drawdown

Market volatility remains structural, driven by political incentives surrounding upcoming midterms rather than temporary market stabilization. While short-term tactical interventions—similar to previous negotiations involving China and oil supply—may temporarily suppress volatility, underlying inflationary pressures from a robust economy and AI-driven expansion persist. A significant market correction, potentially reaching 25-40%, is anticipated between the midterms and next June. Investors should prepare for this period of instability by utilizing longer-dated volatility instruments, such as 90-day or 120-day options, rather than relying on short-term VIX exposure. As the political landscape points toward a potentially contested election, the window for a major drawdown is narrowing, necessitating a shift toward defensive positioning and hedging strategies to navigate the expected market turbulence.