Zero Hedge is one of my favorite blog on the risk analysis and for the global events, the blog argues that we are living in the Golden Age of Central Bankers, and that wreaks havoc on the fundamental nature of market expectations data.
- The VIX (Volatility Index) is not a reliable measure of market complacency.
- The wisdom of crowds is non-existent.
- Fundamental risk/reward calculations for directional exposure to any security are problematic on anything other than a VERY long time horizon.
- I’d rather be reactive and right in my portfolio than proactive and wrong.
The Golden Age of the Central Banker is a time for survivors, not heroes. And that’s the real moral of this story.
Let’s dig deep to understand the most basic question in risk management. Continue reading “Risk Analysis – Central banks and Volatility”