INSUBCONTINENT EXCLUSIVE:
By Robert BurgessHardly a day went by in 2017 without some pundit bemoaning the lack of volatility in financial markets
They worried about complacency, implying that the Goldilocks-like environment that enveloped markets was a recipe for disaster
With volatility on the rise, you would think the handwringing would diminish
Now, the pundits are worried the big swings in asset prices of the last few months portend doom.
The simple fact is the recent swings are
closer to what is considered normal, and investors should be thankful
What happened last year was abnormal
Rising volatility will lead to a healthier market
No longer will everyone be on the same side of every trade, taking the same bet that an individual stock or an index will go up or down
stocks.
A primary complaint about low volatility was that it favored the rise of passive investing strategies such as exchange-traded funds,
By one measure, total assets in index funds and ETFs have soared to $6.6 trillion
The spread of this blind approach to investing led the analysts at Sanford C
But since the turmoil in markets began at the start of February, the hedge fund index has lost just 2.22 per cent through April 11, holding
up better than the 6.37 per cent drop in the SP 500, which can be used as a proxy for passive investments
Bank of America data show that 57 per centof all large-cap mutual funds beat benchmarks in the first three months of the year, the best
Kotok points out that whenever the VIX has doubled in a period of three months, the SP 500 has gained an average of 6.31 per cent in the
Second, the Trump administration was focused on such market-friendly moves as reducing regulations and cutting corporate taxes.
But now,
markets are getting back to normal
I say embrace the current conditions, if only because markets are fun again.
