Markets are ripping past all-time highs after Donald Trump’s electoral victory. Doomsday investors aren’t convinced.

The first Donald Trump administration included policy announcements via Twitter, a pandemic, and protectionist tariffs that agitated the country’s largest trade partner.

His second term could be even more “radical” for markets, said Jonathan Webb, an executive at C8 Technologies and the former head of foreign exchange strategy at Jefferies.

“The backdrop is already a more volatile FX market,” Webb said, comparing markets now to when Trump was inaugurated in January 2017. Higher interest rates, struggling European economies, and global inflation have created a more volatile world regardless of who won the election.

“Throwing Trump in, even more so,” Webb said.

For managers that trade volatility and hedge against market crashes, these types of conditions are normally when their strategies come into play. But market volatility is at its lowest level since July, based on the VIX Index, Wall Street’s favorite measure of uneasiness. Assets from US stocks to bitcoin are hitting all-time highs despite the economic backdrop being far from ideal, including the Federal Reserve’s rate cuts in September, indicating a slowing economy.

“When people think things can’t go down, that’s when you start to worry,” said Brandon Yarckin, the CEO of the $16 billion tail-risk asset manager Universa Investments, in an interview with B-17. He pointed out that Warren Buffett’s Berkshire Hathaway is sitting on more cash than ever before — a sign that the Oracle of Omaha thinks markets are overvalued.

“There’s a lot of kindling for a crash out there,” Yarckin said.

The euphoria and fear of missing out on the rally means investors are not knocking down the door of those who thrive in chaotic conditions. Universa has demand for its strategy, Yarckin said, but it’s coming from “a small subset of people.”

Simon Aninat, a volatility portfolio manager for the Natixis affiliate Ostrum, said clients haven’t asked to revive a long-volatility strategy that performed well during the early days of the pandemic but was closed in mid-2023 due to a lack of demand. Firms such as Universa soared during COVID — the Mark Spitznagel-led strategy returned more than 4,000% in the first quarter of 2020, for example.

“We know there’s going to be bumps in the road during a Trump administration, but it’s hard to be sure that there’ll be a big spike of the VIX above 40,” Aninant said. Instead, clients are more interested in the firm’s short-volatility fund, which does well when markets stay calm.

It’s “counterintuitive,” Aninant said, given Trump’s management style, but clients believe the president-elect’s policies mean “the S&P will continue to rise.”

Allocators should be looking for “not necessarily spicy but uncorrelated strategies,” said Mattias Eriksson, a former BlueCrest partner who cofounded C8 Technologies in 2017.

“He was tweeting a lot back then, and he created a lot of intraday volatility within the market,” Eriksson said, referring to Trump’s first term.

Now, Eriksson’s colleague Webb says there’s the potential for even more out-of-the-box policies given the presence of people like Tesla CEO Elon Musk in Trump’s orbit, and the fact Trump doesn’t have to worry about reelection.

“I wonder if this is being underestimated” by the markets, Webb said. “It’s certainly an experiment.”