10 Mar

Volatility Returns

March 7, 2020Printer-Friendly VersionVolatility has returned to global financial markets. As seen in figure 1 below, the Volatility Index (“VIX”) has spiked to the highest level since 2015. However, looking further back, the VIX is nowhere near the Great Recession of 2008-2009. History proves that volatility in financial markets is nothing new. However, since early 2009, the US markets have enjoyed a low period of volatility.Coming into 2020, the US Stock market was naturally elevated after a decade long decline in the VIX (figure 2). Price to Earnings (P/E) ratios were also elevated (figure 3). As seen in this chart, in the past high levels of P…

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