| MARKET CONDITIONS |
A MARK OF INVESTOR COMPLACENCY
One of the surest bets in all of finance is ready to pay off again…
Everyone knows there are few sure bets in the financial markets. There are few "this is the case, and it always will be" statements we're comfortable making. The market is too random and too dynamic for those types of claims.
But one "this is the case, and always will be" statement we'll stick by is this: "Calm periods of rosy headlines and softly rising prices will always be interrupted by periods of wrenching volatility and vice versa."
That's just the way the world works.
For a picture of this "always the case, always will be" phenomenon, we consult the popular Volatility Index (the "VIX"). It's the most popular gauge of market volatility. When the VIX is low (around 15), it indicates investors have few worries and see blue skies ahead. When the VIX is high (above 30), it indicates panic and confusion.
As you can see, low VIX readings are regularly followed by big spikes in volatility. And right now, we're seeing VIX readings below 13. In today's world of Flash Crashes and debt scares, these are "basement" level readings. Expect a spike soon.
One of the surest bets in all of finance is ready to pay off again…
Everyone knows there are few sure bets in the financial markets. There are few "this is the case, and it always will be" statements we're comfortable making. The market is too random and too dynamic for those types of claims.
But one "this is the case, and always will be" statement we'll stick by is this: "Calm periods of rosy headlines and softly rising prices will always be interrupted by periods of wrenching volatility and vice versa."
That's just the way the world works.
For a picture of this "always the case, always will be" phenomenon, we consult the popular Volatility Index (the "VIX"). It's the most popular gauge of market volatility. When the VIX is low (around 15), it indicates investors have few worries and see blue skies ahead. When the VIX is high (above 30), it indicates panic and confusion.
As you can see, low VIX readings are regularly followed by big spikes in volatility. And right now, we're seeing VIX readings below 13. In today's world of Flash Crashes and debt scares, these are "basement" level readings. Expect a spike soon.
RSS Feed
