"Buckle Up" - Low-Vol 2017 Means Bumpy Ride Ahead

Via LPL Research,

2017 was one of the least volatile years for the S&P 500 Index in history.

With only eight 1% daily changes, not a single 3% pullback, and the lowest average CBOE Volatility Index (VIX) for a full year ever - 2017 will go down in tranquility history.

Which brings us to an important question: What does it mean for 2018?

Per John Lynch, Chief Investment Strategist,

“Historically, calm years like what we experienced last year have coincided with great bull markets, but history tells us to buckle up because the following year has tended to be a lot rockier. That isn’t a reason to panic though, as this may bring about opportunities for active investors.”

We looked at years with some of the smallest intra-year pullbacks ever and found that the average gain was nearly 26%. The next year, however, saw an average pullback of 12.1%, while the average number of 1% moves (closes either up or down 1%) spiked from under 13 to over 30. But the good news is the S&P 500 managed to gain a respectable 8.5% on average.

 

https://www.zerohedge.com/sites/default/files/inline-images/20180112_vix3.png

In other words, a continuation of the bull market is possible, but another steady move higher appears unlikely. Instead, we should be on the lookout for multiple dips and consider using those opportunities to add to equity positions during the year.

Comments

LawsofPhysics Fri, 01/12/2018 - 09:34 Permalink

Bullshit.  Are people still accepting central banker/financier fiat currency in exchange for the products of their labor?

Yes? If there isn't a lot of volume then I would actually argue the opposite, that 2018 will be less bumpy, as the fuckers in banking and finance can create or destroy as much digital/paper fiat currency as they want!!!

 

divingengineer LawsofPhysics Fri, 01/12/2018 - 10:57 Permalink

Do EBT cards affect the VIX? That's the only appreciable exchange of fiat currency going on right now in this country. 

Deflation is here in many places, shit you don't need gets cheaper, shit you must have like rent and food is off the chart.  Unemployment is a ridiculous lie, this "tax reform" baloney will probably end in tears, Trump can't seem to remember why we voted for him, the MIC is moving ahead with wars in Iran, Ukraine and the South China Sea, Treasuries are fucked if China quits buying, it is going to be interesting this year. 

In reply to by LawsofPhysics

wmbz Fri, 01/12/2018 - 09:38 Permalink

"That isn’t a reason to panic though, as this may bring about opportunities for active investors"

Panic? Who in their right mind would panic?

We got this shit, the fix is in!

Deep Snorkeler Fri, 01/12/2018 - 09:41 Permalink

The US Economy

A false foundation of myth, fraud and criminal behavior.

A fantasy of statistical deception and logical absurdity.

Weird electro-mechanical forces converging for the benefit

of a small caste of amoral degenerates.

Bank_sters Fri, 01/12/2018 - 09:43 Permalink

The central banks have flushed so much sweet feed into the system that I literally get about  50k in zero percent credit card "checks" every month.  I'm not joking...  

I have zero credit card debt.  However credit card debt is now at records high- the exponential function needs to be fed.   One day it will vomit all this back up.  In the meantime I keep on stacking and diversifying...Land, food, pms, and eat well and exercise daily..

 

 

whatisthat Fri, 01/12/2018 - 09:50 Permalink

i would observe 'the VIX' is likened to a caboose or end of a 10 mile long freight train - and which brings no value of forecasting manipulated markets....just another point of dribble for corrupt talking heads to stuble upon!

Hubbs Fri, 01/12/2018 - 10:00 Permalink

If I hear those phrases "buckle up it's going to be a bumpy ride" or "get your popcorn" one more time I think I am going to puke.

wholy1 Fri, 01/12/2018 - 10:15 Permalink

The "Clock Is Ticking" for whom?  Does "Low-Vol 2017" suggest that the CB's "FIAT currency flood" may actually be reduced OR, as in any pyramid scheme, said "flood" is increasingly more "absorbed"/aggregated/captured by the OWNERS  of said PRIVATELY-held CBs' on the UNFUNDED/UNmonetized "coupon" portion - which is then eventually converted to REAL asset holdings when "borrowers/governements" default on coupon payment to said OWNERS who are the 'secured parties" of said bonds?

Yellow_Snow Fri, 01/12/2018 - 10:27 Permalink

The "Clock Is Ticking"...  is more of the same old... 

I think most on ZH have realized that if you would have been listening to these guys... 

You would have been wiped out long ago trying to short the S&P

These authors just do not understand why everything is going up...