FEBRUARY, 2013—“MINIMAL WORRIES BY INVESTORS”. I posted on December 29, 2006 on an article by Professor Larry Summers which pointed out that “financial markets are pricing in an expectation of tranquillity as far as the eye can see.†He noted that the measures of volatility in the financial markets were very low; that is, the markets thought that, from a historical perspective, there was very little risk in financial investments. He then asked whether the financial markets were missing something. At the beginning of 2008, I posted that the events of 2007 made Professor Summers’ article look prescient by showing some of what the financial markets had missed.
Six years later, in the Financial Times (February 2-3. 2013), John Authers points out that: “Volatility in stocks, as captured by the Vix index,…is at its lowest since early 2007 and close to a historic low. This implies minimal worries by investors.”