VOLATILITY S&P 500 Index Chart - Yahoo! Finance.
The VIX has been declining steadily since October of 2008 and, after a brief uptick in late January, is back to about where it began the year. The question is - are investors getting complacent again. At the risk of sounding overly pessimistic, the U.S. economy is still roughly 12,000,000 jobs short of full capacity, earnings estimates are declining, government spending continues to increase and businesses and consumers continue to reign in debt. These issues don't provide any reason, to me, as to why investors would be so sanguine regarding future investment performance.
We continue to have concerns regarding equity market appreciation in 2010 and even into 2011. Income remains the more likely source of any positive absolute returns this year. Continued complacency among investors, demonstrated by the VIX, could make positive total returns even more difficult to achieve if that complacency is shaken for any reason. Better to be skeptical than surprised!
The VIX has been declining steadily since October of 2008 and, after a brief uptick in late January, is back to about where it began the year. The question is - are investors getting complacent again. At the risk of sounding overly pessimistic, the U.S. economy is still roughly 12,000,000 jobs short of full capacity, earnings estimates are declining, government spending continues to increase and businesses and consumers continue to reign in debt. These issues don't provide any reason, to me, as to why investors would be so sanguine regarding future investment performance.
We continue to have concerns regarding equity market appreciation in 2010 and even into 2011. Income remains the more likely source of any positive absolute returns this year. Continued complacency among investors, demonstrated by the VIX, could make positive total returns even more difficult to achieve if that complacency is shaken for any reason. Better to be skeptical than surprised!
