Sign in     Like us on Facebook Follow us on Twitter Watch us on YouTube

News and Blog

Join 5000 other sharemarket traders for regular blog updates!

Browse to a category

Blog Search

Volatility and Stuff

With the situation on the Korean Peninsula threatening to give us another 9 years of MASH and with our own politician desperately trying to find relevance on the world stage by injecting themselves into the crisis I thought it might be interesting to see how markets viewed what was going on. Markets traditionally respond to uncertainty with a lift in volatility – this lift reflects not only the uncertainty but also the need to be compensated for the risk associated with this uncertainty. If things are really bad then markets lift volatility across the board. So to see if this was happening I took a small snapshot of major markets, looked at their 30 day historical volatility and then compared that with their long term average volatility.  I have marked those markets that are currently experiencing relatively low volatility in blue. The results of my straw poll can be seen in the table below.

HV Comp

Intriguingly the worlds largest market doesn’t seem to think much of the crisis, nor does gold which is usually seen as a barometer of such things. As to what these means I have no idea and historical precedents are not much help since it offers a slightly different picture. At the outbreak of the original conflict in 1950 volatility went through the roof  but during the Cuban missile Crisis which our idiot politicians are trying to compare it to only had an increase in volatility after the crisis ended and markets were recovering.

So what does it all mean? I have no idea but since it is only observational and not predictive it doesn’t really matter.

 

 

email

Speak Your Mind

*

General Advice Warning

The Trading Game Pty Ltd (ACN: 099 576 253) is an AFSL holder (Licence no: 468163). This information is correct at the time of publishing and may not be reproduced without formal permission. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.

email