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Anyone noticed that recent US market volatility has simmered down?
Any clue as to why the markets seem less volatile so far this year or have I just jinxed everybody?
FT reports that US Market Volatility at Six Month Low:
Quote:
“With Vix levels so low, this is a good time for investors to put on hedge positions,” said Pankaj Khandelwal, a senior Vix trader at Barclays Capital.“Even if you have a bullish view on the market, you can buy downside protection for your portfolio at low prices right now,” said Pankaj Khandelwal, a senior Vix trader at Barclays Capital."
My Question: How would one accomplish this as a mutual fund investor?
bee: linked a recent Reuters article mentioning VIX at 7 month low. FWIW, Yep, noticed the calm, but like the weather - wait a bit and it will likely change. Possibly contributing this week, many Asian markets were closed Mon and Tues for the Lunar NewYear. Could be investors were reticent to make big bets with some important markets down. Don't know what it all means. However, we're back about where we were in early spring - before the "sell in May" psychology took hold. So, at these levels, could be getting toppy again. Who knows? Take care & let us know when you have it all figured out.
When things are quite as they are now after we have had about a upward 12% run since around Thanksgiving ... I am now looking for some downward movement. I have been following ISI, S&P 1500 Index ETF, and it seems that a top is occurring, so with this, I figure a pull back is soon in the making. Think I'll trim a little from my equity ballast and move the proceeds to cash.
You can bet on the VIX/Volatility using all manner of VIX ETFs, but I wouldn't recommend it. (there's even a VIX-hedged S&P 500 ETF, I believe.) I definitely wouldn't use the ETNs.
You can also use the short mutual funds/ETFs, something that I've pondered doing lately, but am not eager to go short and then find that the world has somehow been bailed out again. I believe there's the Fed announcement today, so that may bring something (or not.)
I guess personally I've just become more and more exhausted with trying to capture short-term movements and have just went with a mixture of fairly conservative funds and funds (Marketfield, for example) that have a high degree of flexibility (or the occasional aggressive fund that has done poorly - I added a decent amount to Janus Overseas in q4 2011), as well as stocks that I want to hold to some degree for a long-term period, most of which are cheaply/reasonably valued, play on a theme or I find the business highly interesting or some combination of the three.
Let me say this: I believe that people can do well with market timing - this is definitely not against market timing. However, I just think it gets exhausting the way the market is in this day and age.
the market indeed stopped jumping at any fresh headline out of Europe. the good and healthy development is that correlations, which were at record high, fell most on record -- i am reading 30%. this means that stock pickers, who got clobbered last year on a panicky risk on/risk off movement, might finally get their day in the sun. one brainiac in my team thinks that reduction in volatility is not a calm before the storm, but the fact that investors are getting used to the european threat and take it into consideration when pricing assets. also, this happened with the inception of ltro -- which in effect is a back door tarp. this firmly kicked the can down the road and ensured viability of the earopean financial system -- at least for another 3 years, during which the banks could sell assets, raise equity, retain earnings or otherwise delever -- again, very much like tarp in the u.s. please note that i am not voicing any judgment , just conveying the thoughts behind the fall in vix and correlations.
I agree, for the most part; regarding LTRO. Although this is really just moving money around from one pocket to another. If one could stamp real Euro's in paper form, not unlike passport stamps, it would be interesting to find how the money travels from one bank to another and then back to the ECB to be parked for whatever time period. The Euribor rate has moved down since the back stopping from the long term loan availability.
How to unwind the pockets as they continue to fill is the major question going forward over many years.
Comments
http://www.reuters.com/article/2012/01/21/us-usa-stocks-weekahead-idUSTRE80K04O20120121
When things are quite as they are now after we have had about a upward 12% run since around Thanksgiving ... I am now looking for some downward movement. I have been following ISI, S&P 1500 Index ETF, and it seems that a top is occurring, so with this, I figure a pull back is soon in the making. Think I'll trim a little from my equity ballast and move the proceeds to cash.
Good Investing,
Skeeter
You can also use the short mutual funds/ETFs, something that I've pondered doing lately, but am not eager to go short and then find that the world has somehow been bailed out again. I believe there's the Fed announcement today, so that may bring something (or not.)
I guess personally I've just become more and more exhausted with trying to capture short-term movements and have just went with a mixture of fairly conservative funds and funds (Marketfield, for example) that have a high degree of flexibility (or the occasional aggressive fund that has done poorly - I added a decent amount to Janus Overseas in q4 2011), as well as stocks that I want to hold to some degree for a long-term period, most of which are cheaply/reasonably valued, play on a theme or I find the business highly interesting or some combination of the three.
Let me say this: I believe that people can do well with market timing - this is definitely not against market timing. However, I just think it gets exhausting the way the market is in this day and age.
"However, I just think it gets exhausting the way the market is in this day and age."
I agree, its almost like having a full time job where your constantly worried about getting riffed.
I agree, for the most part; regarding LTRO. Although this is really just moving money around from one pocket to another. If one could stamp real Euro's in paper form, not unlike passport stamps, it would be interesting to find how the money travels from one bank to another and then back to the ECB to be parked for whatever time period. The Euribor rate has moved down since the back stopping from the long term loan availability.
How to unwind the pockets as they continue to fill is the major question going forward over many years.