I went in studio on TD Ameritrade Network last Friday to talk about sectors, equities, and volatility. Here’s my discussion with Jill Malandrino …
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.
I went on TD Ameritrade Network this morning to talk about the markets and volatility. Here’s my discussion with Ben Lichtenstein…
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.
A study was recently conducted by Bernstein Research looking at themes involving volatility extracted from the last 119 years of financial market history. Below are some of the findings from their study…
Volatility and Economic Growth Aren’t Tied
The strength or weakness of the economy has not dictated the severity of the response experienced in the volatility market. The research compared the moves during the Great Depression and the GFC in ’08. Scott Gamm of Yahoo noted the following quote, “The worst equity volatility is about banking stability, liquidity, panic, forced selling – not simply the fundamentals of the economy that were that much worse in the Depression era.”
Geopolitics Doesn’t Guarantee High Volatility
Looking at the time period that includes WWII and the Vietnam War, Bernstein researchers foundthat volatility remained subdued even though there was a global stress taking place during that time. Carlsson-Szlezak notes, “As disruptive as the wars during that era were, investors could count on a healthy banking system with low leverage and a stable foreign exchange rate ushered in by the Bretton Woods system.”
The Relationship Between Inflation and Volatility is Weak
With a review of the high inflation era of the late 60s through early 90s, equity volatility averaged just 13% as noted by Gamm. “The ‘bad macro’ era of the 70s and 80s is offset by a healthier (but weakening – e.g. 1987 [stock market crash]) financial ecosystem.”
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.
