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Skewed Volatility

October 11, 2010


Good morning. The Federal Reserve gave us another strong market last week, with the SPY up 1.93 (1.7%) to close at 116.54. That is the highest close in the SPY since last May 12. The VIX was down sharply on the week, closing at 20.7 (down 8%), which is the lowest closing since May 3 of this year. Again the investing public appears comfortable with the price of insurance on the market decreasing as the market advances, something that, to me, has always seemed counter-intuitive.

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Economics 101

September 13, 2010


Good afternoon. It was a second in a row up week for the market last week, with the SPY advancing .59 to close at 111.48 (.5%). It was significant because the market was able to hold and consolidate the large gains of the week before, leaving the SPY up a strong 4.3% for the two-week period. The VIX was actually up slightly (3%) last week but still showed a large drop of 10% for the two-week period, closing at 21.98.

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Questions and Absurdities

July 27, 2009


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Illinois is trying to bet their future on video gaming in bars…

Good morning. Market is on a tear, with the SPY up another 4.2% last week, closing up 3.97 to 98.06. That 98.06 close represents a 46% move up from the bottom tick of 67.10 on March 6, quite an impressive bounce. Equally as dramatic is the plunge in the VIX to a close of 23.09 last Friday, a level not seen since 9/8/08. All of a sudden fear, or even concern about the market moving a little too fast, is totally out of favor. To hear the financial press tell it everything is ok, earnings are better than expectations, we will start to grow in the third quarter, etc. Everyone, from government to reporters to stock owners, are eager to declare the last year a nightmare over, and get back to business as usual, even though that business as usual is maybe what caused the nightmare in the first place.

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Like a Shout in a Hurricane

December 29, 2008


Good morning. The year end rally continues to be elusive, the VIX is creeping down steadily, the market may be settling into a range at levels no one is happy with, are these the cards being dealt? Right now it seems so. On the credit front we continue to have such fear that the 30-year rates on U.S. Treasury Bonds are 2.6%. Incredible, does anyone know any sane person who would give their money to anyone for 30 years at an interest rate of 2.6%? Does anyone really predict that there will be zero inflation for 30 years?

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