Comments on recent market events

Perspective is important to maintaining a clear head in face of market turbulence.

Below is a picture of the last 6 months price performance of VTI (in green), Vanguard Total U.S. Stock Market, which represents approximately 95% of the tradable US equity market. We added BIL (orange) , SPDR 1-3 Month T-Bill ETF (0.2yr) which tracks short term Treasury bills, and VEU (blue), Vanguard FTSE All-World ex-US, a proxy for all non-US equities.

You can see the decline of VTI of about -5.6% over the last 6 months and -8.5% for VEU. Not a good or pleasant thing.

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Volatility: the inverse bubble

Updated on Wednesday, June 18, 2014 at 01:34PM by hb

We were dismayed to see today’s WSJ article Fed Officials Growing Wary of Market Complacency only because we were working on the final draft of this posting yesterday. No matter.  We recommend the better and earlier article of May 20th,  Tranquil markets are enjoying too much of a good thing by Ms. Trett of the FT about the continuing decline of volatility in nearly every market. It is worrisome, and we’re not sure anyone understands why it is happening. Nor is it limited to equity markets: oil, fixed income, currencies... pick a card.

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