The market is hitting record highs again — with it comes record low volatility. No one is bothering to hedge their positions via puts anymore. We’re all just out there, naked and stark raving mad, making ravenous amounts of money.
Has there ever been a time when the VIX collapsed like this, giving us a sense of invincibility that one day shredded us to pieces — cracking us asunder under a dizzying panorama of sell orders?
As a matter of fact there was, circa 2003-2008.
Look at that looong period of nothingness, how the market annihilated and crushed the spirits of those betting against her. It was a sight to behold. We quite literally went from end of the world to becoming virile and filled with purpose again — almost overnight. Naturally, as the story goes, it all ended with the housing crash — spurred on by Federal Reserve interest rate hikes — 16 consecutive hikes in fact — as Greenspan sought to ‘normalize’ rates. Sound familiar?
And here we are today, with enough lassitude on the bear side to consider them to be non-existent. Markets drift higher on a daily basis, compressing the VIX index to and below $10, all the while risks mount.
Let’s not get ahead of ourselves by drawing parallels between then and now. After all, we’re not in a housing bubble, at least in the sub million dollar Mcmansions. This go around, all of the gains in real estate, or most of them, are found in multi-million dollar homes. The only notable risks that I can think of at this time is the complete annihilation of the retail landscape, best represented in America by its shopping malls. The zombie oil and gas industry, filled with companies barely capable of paying off their interest on debt. Once rates go higher, it will be very hard for them to exist. And, lastly, let’s not forget the juxtaposition of plummeting demographics and soaring sovereign debt. The entirety of Europe is on a ruinous path of spiraling populations, due to lack of offsprings, and record high leverage on their balance sheets.
How can Italy survive, and the EU for that matter, when their population will halve inside 40 years? The same goes for Japan and several other western nations.
For now, enjoy the bull.
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No worries about Europe. Europe will survive. The usual synagogue suspects will replace white, intelligent, very handsome, virile, extremely well informed, masculine alpha males like myself with swarms of Neanderthal like stupid mongrel moozlim rats from Middle East where they breed them like cockroaches.
Neanderthals were smarter than homo sapiens and had superman type strength and vision. I myself are in the 98% having 3.5% Neanderthal genes in my DNA — living example of superior intellect.
Not sure where you shop for your information but it’s largely fake news:
https://tinyurl.com/y7z6856d