Comforting Conclusion
Wednesday, May 24th, 2017 Categories: Global Equities, Risk aversion, Volatility
Low volatility not always followed by an explosion
We are now very close to the all-time low on our index of multi-asset volatility, but setting a new record is not really important. What matters is how quickly we revert to the median and what leads us higher. Previous episodes suggest that the reversion takes 8-10 months and is led by US High Yield and US REITs. The numbers also suggest that global equities could correct by 10-15% without significantly damaging investor psychology.