Invesment Planning

Volatility Low & Risk High: What Does This Mean?

As the U.S. stock market hits new highs, and bond yields continue baffle everyone who “knew” that interest rates were bound to rise this year, the most dramatic data point of all might be volatility, which keeps plumbing remarkable lows. And this isn’t just stock-market volatility (as measured by the VIX index), the intermarket volatility index, which averages expected volatility of stocks, bonds, currencies, oil and gold is at its second lowest reading in 20 years. What does this mean? Not sure–mixed signals. One the one hand, low volatility means that prices aren’t moving much either way, which means that […]

Risk: Bad Behavior

In an earlier blog (http://simplesmartinvesting.com/?p=253) I tried to clarify one meaning of  “risk,” by substituting the term “bad outcome.” Now, some bad outcomes are beyond our control; for example, we can’t dictate what the stock market will do. But many savers suffer bad outcomes as a direct result of their own behavior. And if we don’t learn how to control our instinctive responses to booms and busts, we’re not likely to earn what we could and should in our investment portfolios. So here I’m going to focus on bad behavior as another form of risk we need to manage. Bad Behavior […]
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