Tags: Stock | market | volatility | risk

Stock Market Volatility Plunges; Some Worry About Risk

By    |   Friday, 23 May 2014 09:53 AM EDT

The main indicator of stock market volatility has plummeted in recent weeks, and some experts worry that investors are getting a little too comfortable.

The Chicago Board Options Exchange Volatility Index (VIX), which measures expected volatility for the S&P 500 index, touched a 14-month low of 11.68 Thursday before closing at 12.03.

So what has lessened investors' fear?

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

The fact that the S&P 500 and Dow Jones Industrial Average stand within 1 percent of their record highs is one factor, traders tell The Wall Street Journal.

Low interest rates, continuing moderate U.S. economic growth and the Federal Reserve's tapering of its quantitative easing are playing a role too, they say.

But some experts see danger. "Volatility in the markets right now is unusually low," New York Federal Reserve Bank President William Dudley said Tuesday. That "makes me a little nervous," because of potential shocks, he said.

"The market's been lulled to sleep," J.J. Kinahan, chief strategist at TD Ameritrade, tells The Journal. "At the end of the day, [stocks] haven't really gone anywhere for most of this year."

Don Rissmiller, chief economist at Strategas Research Partners, agrees. "We've been lulled into this state of complacency. We've really forced volatility down so much that the only way it can go is up," he tells The Journal.

Volatility will only return on a sustained basis if two crises occur virtually simultaneously, says Russell Rhoads, senior instructor at the Options Institute at CBOE.

"We just haven't had that double whammy," he tells MarketWatch. "The smart guys aren't necessarily panicking at small selloffs, and since 2013 they've been right."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

© 2025 Newsmax Finance. All rights reserved.


InvestingAnalysis
The main indicator of stock market volatility has plummeted in recent weeks, and some experts worry that investors are getting a little too comfortable.
Stock, market, volatility, risk
287
2014-53-23
Friday, 23 May 2014 09:53 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved