Friday, December 17, 2010

VIX and More and the 2011 Bespoke Roundtable

For the second year in a row, I have elected to stick my neck out and make my best guess at what the investment world will look like in the coming year in conjunction with the Bespoke Investment Group’s second annual roundtable.

As someone who has a tendency to focus almost all of my predictive powers on the next two options expiration cycles, I find that forcing myself to think in terms of a one year time horizon is a daunting task. Still, just going through the process and committing some ideas to paper makes this exercise worthwhile and fun.

Frankly, I was surprised by how accurate many of my predictions from last year turned out to be and for better or (more likely) for worse, this has emboldened me to be even more provocative and more specific this year, including some outrageous comments about AAPL.

More to the main theme of this blog, I think readers may find the following predictions for 2011 to be of interest:

2011 will mark the rise of volatility as an asset class.  Part of the reason for this rise will be the runaway success of VIX-based ETNs and ETFs, notably the recently launched XIV, which will prove that volatility vehicles can be good buy-and-hold investments.  XVIX will also prove to be a popular and successful buy-and-hold ETN and once liquidity improves, TVIX will hit a tipping point and become the darling of day traders.”
All in all, a dozen top bloggers offered up their predictions for 2011. Bespoke has assembled some of the highlights from the responses here.

Additionally, there is a to the the full text of my replies to all 34 questions about 2011 here.

For those financial anthropologists in the crowd, the highlights for the 2010 roundtable are here and my archived predictions for 2010 are here.

[12/19/10 Update:  note that there were several incorrect links to Bespoke that have since been corrected ]

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Disclosure(s): long XIV and XVIX at time of writing

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