In this world of uncertainty where life do not has guarantee, people aspire for guaranteed returns. The recent posts done on my blog pertains to are market’s overvalued and volatility .That how a financial television especially is built on the idea of using volatility, wherever it may be, to capture eyeballs
The Warren buffet latest (2015) letter to the Berkshire Hathway shareholders is a great – great read especially from the page 24 onwards. Here is the link Berkshire Hathway Letter
Some of the smartest blogger have shared their thoughts on the volatility & risk from the letter .
Josh Brown writes:-
The modus operandi of a lot of Street denizens is to present something as a problem for you so that they can sell you the solution. By putting the fear of volatility in front of you as though it’s a serious long-term risk, the door is then opened for all manner of high-cost, horrifically ineffective products or strategies. My partner Kris likes to say “the easiest way to sell someone a map is by first convincing them that they’re lost.” Continue reading “Guaranteed returns & Guarantee of life”
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”
Volatility refers to the frequent upward and downward movement of price. The more prices fluctuate, the more volatile the market is. A chart of day-to-day stock prices looks like a mountain range with plenty of peaks and valleys, formed by the daily highs and lows. However, over months and years, the mountain range flattens into more of a gradual slope. What this implies is that if you are planning to hold a stock for the long term (more than a few years), the market instantly becomes less Continue reading “Volatility Trading – Back to School”