Volatility
It has been an interesting start to the year to say the least.
Trump is rattling cages and espousing all sorts of “interesting” foreign policy ideas. As well as imposing and threatening to impose tariffs on all and sundry.
On the US measure we have a trade surplus with the US – we should avoid tariffs. On our own measure we have a trade deficit with the US – tariffs may be in the offing?
Also, Deepseek has been causing waves – all the AI most of us will ever need for a fraction of the cost. It looks like the US techies have a huge amount of egg on their face. This sent serious tremors through US stock markets when announced.
The upshot of all this noise is that markets are becoming more volatile, but is that really the case?
A cursory look at “Vix” – the usual measure of stock market volatility – suggests not.
Currently Vix is at 15.55. The annual average over the last ten years is 18.26. So, stock markets are less volatile than usual? No.
Over the last ten years the Vix has ranged between an all-time high of 82.69 (March 2020 - the Covid crash) and an all-time low of 9.14 in November 2017.
It has been 430% higher and 40% lower. The volatility of the volatility measure is volatile, and the annual averages hide that.
We are more interested in volatility in the moment, not the average.
So far this year the high point for Vix is 40% above the low point. That is quite a swing in sentiment over the first 5 weeks of the year. Markets are volatile.
PIP-VEVE
We exited our last VEVE trade on 4 October last year. That was 18 weeks ago. It was one way traffic between October and mid-December – VEVE just went and up.
Then it started flirting.
Twice before Christmas and twice since we have come close to buying VEVE again, but we have not breached the threshold we need to.
It feels like something is brewing and the brewing started about 6 weeks ago. I would not be at all surprised if we are called into action in February – time will tell.
Our current target buy price is 8700, last night we closed at 8805, again we are not far off.
While we exercise commendable patience your cash balances continue to earn a respectable rate of interest.
Louise Minns
Louise has been with us for a few months now, I have known her for a decade, and she has worked in financial services operations for nearly all that time.
She will now be helping Zoe and I in managing your affairs.
I will add her to our WhatsApp groups, and you can expect her to be more visible in our dealings with you going forward.
That is all for now! I welcome your comments and feedback.