Is the decline in volatility a major concern

Livewire News


Is the decline in volatility a major concern? This chart shows the VIX index, a guide to expected volatility in the US share market. It is clearly very low and is consistent with the US share market having traded in a relatively narrow rising trend since mid-2012. There hasn't been a 10% or more correction in US shares since mid-2012. In many ways this is a good thing. It is far better than the extreme volatility seen through the GFC and its aftermath. The concern, though, is that periods of low volatility can lead to a false sense of investor security and excessive risk taking. However, the low level of volatility is arguably a rational reaction to the more stable macro-economic environment seen in more recent times. As the 2004-07 period showed, volatility can remain at very low levels for a long time before it runs its course. (VIEW LINK)

3 topics

Livewire News
Livewire News

Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.


No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Please sign in to comment on this wire.