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What Happened to Market Volatility?
Old 01-26-2012, 02:33 PM   #1
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What Happened to Market Volatility?

I suspect I'll get shooshed for saying anything. But it's interesting how market volatility seems to have subsided considerably near the end of the year. It seemed like the European debt crisis was driving much of the volatility along with USA congressional paralysis. AFAIK, those two issues are still unresolved. Not complaining, just wondering...(churning for year end bonuses? - that would be too cynical)
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Old 01-26-2012, 02:41 PM   #2
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Perhaps the market makers are really introverts and saw Keim's post, and decided it was time to stop pretending.

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I am an introvert .
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Old 01-26-2012, 02:53 PM   #3
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I've noticed the same thing but haven't said anything so as to not jinx it. Shh!

No idea, though. Even the on-again-off-again implosion of Greece and the Eurozone isn't creating much of a stir. Seems odd given recent history.
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Old 01-26-2012, 02:59 PM   #4
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Congress is not in session.
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Old 01-26-2012, 04:00 PM   #5
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I've noticed the same thing but haven't said anything so as to not jinx it. Shh!
Obviously this is one of those threads in which I shouldn't say a word, certainly not any beginning with "Wh"....

But I have been thinking the same thing.
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Old 01-26-2012, 04:16 PM   #6
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Some thoughts: (and yes, shhhhhhh)

1) Headline fatique. Investors just stopped reacting to every little nuance coming out of Europe.
2) Many MFs have slowly and quietly reallocated away from European/Euro dependent equities
3) Belief that the US economy is getting stronger (see #1)
4) A coming European recession is already 'baked in' to the US equitiy prices. (see #2)
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Old 01-26-2012, 04:59 PM   #7
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I suspect I'll get shooshed for saying anything. But it's interesting how market volatility seems to have subsided considerably near the end of the year. It seemed like the European debt crisis was driving much of the volatility along with USA congressional paralysis. AFAIK, those two issues are still unresolved. Not complaining, just wondering...(churning for year end bonuses? - that would be too cynical)
I'm sure I'm in a minority but I am very disappointed to see the volatility drops so dramatically. The VIX was crazy high back in the summer which made it a very profitable time to write options. At the point I am pretty much out of the business of writing options, because I think the risk of a market correction aren't substantially lower than they were back in the summer because as you say neither the European debt crisis, nor the fundamental conflicts in the US about how to handle our debt are close to being resolved.
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Old 01-26-2012, 05:04 PM   #8
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I had noticed as well.

As for upcoming stability, are election years typically more or less volatile than average?
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Old 01-26-2012, 06:21 PM   #9
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Lloyd Blankfein has his finger on the dow UP button. He'll get tired soon.
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Old 01-26-2012, 06:30 PM   #10
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Doesn't the market generally go up during a presidential election year?
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Old 01-26-2012, 06:41 PM   #11
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Doesn't the market generally go up during a presidential election year?
It used to, often. But then there was 2008...
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Old 01-26-2012, 07:17 PM   #12
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Quote:
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I suspect I'll get shooshed for saying anything. But it's interesting how market volatility seems to have subsided considerably near the end of the year. It seemed like the European debt crisis was driving much of the volatility along with USA congressional paralysis. AFAIK, those two issues are still unresolved. Not complaining, just wondering...(churning for year end bonuses? - that would be too cynical)
it is kind of scary, but with the ECB guarantee of 3 years backstopping banks and the US Fed committed to almost free funds through 2014, this is not a surprise.
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