The markets seem to be defying gravity this year. My 401k is up 9.5% YTD, my IRA mutual funds are up 28% YTD. My equity account has gained 20% in two months. Looking at some other international markets and their indics are up 100% in the last 12 months alone. Something has to give. With oil at $75 just need the ignition source. My gut feeling is that we are due for a major correction sometime soon.
yes the markets defied gravity for along time. it's been 3 years and 2 months since the s@p has had even a 12% decline. the volatility betweent he high and low for the year on the s@p has been the lowest in 75 years the last 2 years. the vix is stuck in the 10-13 area for 1 year. it could start anytime and be a vicious correction. we'r eoverdure by over 2 years
Forget oil for now, watch the 30 year bond and US Dollar. If it gets over 30yr yield 5.25%, or Asset values in USD dives ? When the return on 30 year bonds starts pulling money away from stocks OVER 30 YEARS. So I billion bucks in bonds at 5.25% for 30 years may seam a good bet with USA economy having so much debt. Also If USD sinks, all USD dollar assets would sink... USD$ and 30 yr are the the ones to watch !
Is volitility really at historic lows? During the choppy market from around 1960-1980 it may have been lower (not really sure, I'm asking). If it is at historic lows maybe its because record low commisions costs, record high program trading, and a proliferation of hedge funds. Hate to say its different this time, but I really can't see anyway out of this barring some cataclizmic event that sends the markets into freefall, and causes a lot of hedge funds to blow up. But then if that were to happen the rise in volitility wouldn't even be worth all the econmic damage. I much rather see infectious greed grip everyone as the world markets breakout with tremendous momentum and force bears to capitulate.
you're dreaming my friend. all the markets in the world have been in parabolic runs for years. now it's time to end the nonsense
It's all been a dream my friends. Adjusted for inflation, the markets have gone nowhere for years. Soon it will be time to deflate the nonsense. Debt is money. A point reached where consumers, requests for credit, slows and then declines, is endgame. Interest on all debt must have ever increasing new debt for payment maintenance. Once the Ponzi starts walking backwards default feeds on itself.
I bought into the "ultralow" volatility argument for a while because VIX was so low but then I checked it out on historical yahoo dow data. Below are some charts of dow vs a modified normalized volatility measurement 100*( 20 period exponential average of (high - low)/close ). Very low values do precede historical dips. I normalized it so that todays 11,000 levels would relate to 1929s 350 levels. The current levels are low but not stunningly so.
I am not a trend follower as a player in markets (eg Dow). However you only need to look at the growth rates for all major economies in 2005 and consider growth rates forecast for the major economies for completed 2006. Very damn bullish.
The US is Enron to me. I recently read "Smartest Guys In The Room" about Enron and the parallels with the US government right now are incredible and frightening. Great read if you get a chance... The $USD is poo and becoming more poo - it lost 2% last week just on the hint the US might wrap up rate hikes (lies and more lies). Imagine what a 2% USD drop does to the books of a country like china?? or any of the other countries of the world who hold collectively 50% of their reserves in USD$ denominated issues... Did I hear mention of this on CNBC? Was it at all newsworthy the worlds foremost currency lost 2%. All I heard about was google and what a steal it is at 80X earnings....It is bordering on criminal how biased CNBC is and what a snow job they put up to disguise the fact that the US economy is in a lot of trouble. U.S. has stopped publishing m3 data?? this reminds me of enron... its a shell game at this point. us has to raise 3 billion dollars a day to finance their deficit/debt. if they stop raising interest rates , which they cannot and absolutely won't, we are fubed. when we do raise rates - 7%,8%,9%,10%,11%,12%,20% - the us housing market will go poof. 9 trillion in consumer mortgages . 2 trillion of this amount will be reset this year at 2+% higher interest rates this year. considering 40% of all newly issued mortgages are arms - and that the average net savings rate of the american consumer is negative - this will be the straw that breaks the camels back... not helping is 75$ oil - which might as well round that up to 100$. I call GM and ford bankrupt in the next few years which symbolically will be the wake up call for those who don't quite see the writing on the wall yet. We are at a precipice where the US is losing control of their world power. Brazil, Russia, India, China, growing at 10% +. Us 3%? minus 4-12% inflation (once the printing press really starts to finance our problems)... where would you put your money? I really noticed the shift of power this past week with China's president Hu treating georgy Push like a peasant-bitch (really more then georgy deserves) and telling him to look after his own poo currency and poo problems thank you very much. Really the only thing we have going for us is all the commodities (esp oil) and currencies are USD based. THis forces a certain amount of participation in the USD for the time being. Isnt it proof positive of the woes of the US to see piles of money driving into the Euro - which is really quite hilarious considering how new and really unknown/unstable this currency is? It's tough - because lately i actually see a lot of good value in cetain US companies. but tough to justify buying anything that is denominated in poo. just a small terrorist push in the US could also be a catalyst in my opinion. its on such a verge i feel. just a slight push the only positive in this for traders i can see is how easy it is to participate in other markets and currencies. i have been spending as much time as possible researching these alternatives. Finally, the real proof to me is the insane strength is Gold. First real pullback in a while last week and it got gobbled up faster then jenna jameson on a nob. i dunno - maybe being too negative about this stuff.... but call em like i see em???
i took a look at this some time ago - i think my vendor's data is from yahoo - i simply took an average of 21-day (i.e. monthly) volatility during each year (i.e. average of annualized 21-day std. dev. of daily log returns on DJIA's closing values) - you can see from the attached chart that historically there were some fairly extended cycles of low volatility in the 1950's and 1960's.