Putting Recent Market Sell-off in Perspective

Source: Pixabay

Markets have been unnerved by rising interest rates in the US, with ripple effects around the world. The most staggering event has happened on the VIX market with a number of funds/ETNs making the headlines after having lost tons of money. What should investors take from these events ? A couple of reflections and interesting comments seen here and there. Continuer la lecture de « Putting Recent Market Sell-off in Perspective »

Low Vol Regime In Perspective

Volatility is the most disturbing factor in financial markets and it’s something people should always keep an eye on. Measured by popular metrics like VIX or VSTOXX, it’s assimilated to the « fear indicator » of investors.

Looking at the long past of the US equity market (S&P 500 in chart below), you can see that volatility goes in regimes that can change widely but rely mainly on macro environment (expansion/recession) and it’s impact on the psychology of investor (P/E or valuation).

Volatility in equity market in perspective

Source: Goldman Sachs

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« Be Fearful When Others Are Greedy » – Buffett Most Important Quote

Picked up in a BofAML’s note. The figures in the following quote should have investors reflect on Buffett’s mantra: « Be fearful when others are greedy. Be greedy when others are fearful. »

« The Fed’s bull market: March 9th 2009…VIX 50, HY spread 1873, SPX 676, BKX 20; March 8th 2017…VIX 11, HY spread 373bps, SPX 2363, BKX 97; the bull market catalyst…extraordinary, unprecedented central bank policies. »

Facts make Buffett’s mantra right to the point.

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