We all remember the story of “How to boil a frog”. It seems there are a growing numbers of frogs in the markets these days. Let me explain…for the first time in history we have had a year beginning with 10 straight months of positive returns in the S&P 500. What’s even more surprising…we have had very low volatility during this time. 2017 has been a year where the S&P 500 has had no trading days of +/- 2% in a single session. Although this is unusual, there have been other periods with low volatility. Looking at the snapshot of volatility over the last 17 years, one can see that the market has had many trading days of +/- 2% particularly in the recessionary periods of 2002 and 2008. Which is why it’s more important than ever to be actively managing risk and to make sure that investors are rebalancing back to their appropriate risk targets.
Don’t get caught falling asleep in that warm water…
