Strategist talks market volatility and systematic risk

Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite podcast. As the new year kicks off, investors are eager to uncover what 2025 holds, particularly in light of the incoming Trump administration and the evolving world of artificial intelligence. Michael Reinking, senior market strategist at the New York Stock Exchange, joins Stocks in Translation from its new home, perched above the NYSE trading floor on Wall Street. Our hosts, Yahoo Finance's markets and data editor Jared Blikre and producer Sydnee Fried, discuss the 2025 financial outlook and our phrase of the day, systematic risk.
Blikre defines systemic risk as "the chance of large market-wide disruptions caused by broad factors like economic changes, [i.e.] political events, or the predictable actions of institutional investors, such as commodity trading advisers or quantitative funds."
Reinking highlights the significance of systematic risks: "As you see volatility pick up across equities or other asset classes … they have to reduce that risk budget. And you have very, very systematic flows that come into markets when you start to see trends breaking or volatility pick up … and that's something that we're seeing more regularly within the market," he explained.
He also reflected on the election's aftermath: "There was this expectation that the election would be this volatility-inducing event." While November's rally fueled optimism, December proved to be a letdown. Amid challenging market conditions, Reinking noted that "valuations, which are a little bit more stretched than they have been historically," suggesting heightened volatility ahead. "If you look at four-year presidential election cycles, the first quarter does tend to be one of… the more rocky quarters," Reinking said.
Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers, and hyperbole, giving you the information you need to make the right trade for your portfolio. You can find more episodes here or watch them on your favorite streaming service.
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