US markets setting ‘complacency’ records

US markets setting complacency records

Written by James Weir

James specialises in the theory and best practice of portfolio construction and management. His success within national and international investment banks led him to become a Co-Founder of Steward Wealth and he is a regular columnist for the Australian Financial Review.
April 2, 2017

We’ve written recently that US share markets have been remarkably un-volatile, which is normally interpreted as investors feeling perhaps a bit too comfortable. This has been confirmed by the Wall Street Journal which writes that the average daily move on the Dow Jones index over the past quarter was the lowest in 55 years, at 0.3185%, and for the S&P500 it was the lowest in 50 years, at 0.3172%.

Investors also seem to think the outlook for volatility is low as well, given the VIX index, which attempts to measure the expectations of future turbulence, has posted its second lowest quarterly average ever – see the chart below.

CBOE

 

As we’ve written before, periods of complacency inevitably end with a break out of volatility. The unfortunate thing is, nobody can tell you when.

This article reflects the views of the author and not necessarily the views of Steward Wealth.

This information is of a general nature only and nothing on this site should be taken as personal financial or investment advice, or a recommendation to buy or sell a particular product. You should seek advice from Steward Wealth who can consider if the general advice is right for you.

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