It’s time to put this boon in some more context. I really like the way Charlie has framed it:
The DiMaggio hit streak of markets was broken this week, 385 days above the 200-day set in '95-96. $SPX pic.twitter.com/3toHvV7apn
— Charlie Bilello, CMT (@MktOutperform) June 6, 2014
For you volatility home gamers, the $VIX might be breaking 7 year lows, but it’s most important to me to get a picture of what has come next and Charlie graphs it for us:
Q: Does near record low volatility beget even lower volatility going forward?
Hint: Volatility is mean reverting. pic.twitter.com/suYIWDb3qV
— Charlie Bilello, CMT (@MktOutperform) June 8, 2014
As you can see clearly, volatility is mean reverting ( a mjority of red boxes follow), especially from these extreme levels.
Does that mean this bull market is ready for a breather?
Mathematically yes, but I would argue mood trumps math.
My #Lindzanity Rule #1 is – Timing the end of extreme optimism is harder than timing the end of extreme pessimism.
I leave you with this chart of Union Pacific – a Canadian Railroad that ships Amazon Prime and hockey pucks to Eskimos in The Yukon. The air is getting thin for some of the trees so be careful as the rate of ascent is not sustainable.
We can thank the FED for the streak. Been throwing. Change ups for the last 5 years.
yes 5 years of zero percent
Money Supply Chart
We are witnessing the mother of all bubbles, I don’t think most people realize that or are willing to accept it. Most savvy investors scoff at money market fund returns in light of the equity markets, but when this bubble pops, they are going to wish they endured a few years of slightly negative real returns.