Wednesday, April 18, 2007

1 + 1 = 1987?

Though this blog is ostensibly about volatility, I try not to inject too much of the perma-bear melodrama into what I write, but I would remiss if I didn't point to some alternative opinions from time to time.

Take two posts I just happened upon.

Libby Mahalka of Financial Pragmatist has a nice review of the divergence between risk as measured by the VIX and the shrinking risk premium available in the bond markets, as evidenced by credit spreads.

Meanwhile, Barry Ritholtz at The Big Picture looks at a big picture of 2007 vs. 1987.

Now put these two ideas together...

For the record, I'm not hitting the panic button. I don't even have my hand near the button. Instead, I prefer to take my cues from what the market is actually doing rather than what I think it might do. Then again, it is always good to know how some others in the market are thinking about potential future scenarios.

2 comments:

Bill Luby said...

Fortunately, the folks at datawink.com do not have any pre-conceived notions about anything looking like 1987. Their conclusion is that the current chart pattern has a generally bullish historical precedent.

Bill Luby said...

An interesting projection of volatility jumping back up to at least 22.4 (I love the precision at work here) at Stock Market Trend Analysis.

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