- The measure of volatility on the S&P 500 (VIX) hit multi-year lows back in June of 2014 just above 10.
- In October 2014, at the height of the Ebola scare, it rose to above 30.
- Earlier this month, the drop in oil prices and global economic certainty pushed the vix into the low 20's.
- The ECB helped to counter this with last week's QE measures.
- US corporate earnings surprises (to the downside) are pushing it back up.
Remember my theme: Central Banks do not like volatility because it reduces confidence:
- Yesterday the Conference Board announced that the (US) Consumer Confidence Index reached 102.9 (the highest level since 2007).
- I would suspect that with today's post FOMC meeting statement, the FED does not want to undo the current level of confidence with any significant change in policy.
- Sometimes boring is good. In fact when it comes to investing, we like boring!!
- However, volatility levels have been rising to higher levels since last June and investors must not be complacent about this trend.
- Balance and diversification are the best protection to get reasonable growth and minimize the impact of volatility.
- How is your asset allocation?