Economic Growth: Ghost Of Crises Past

Economic Growth: Ghost Of Crises Past

Economic Growth: Ghost Of Crises Past by Jay Leopold, ColumbiaManagement

  • The market’s extended period of low volatility was shattered in the past month.
  • While it is possible fear-driven selling could resume or accelerate, we do not believe this is the most likely outcome.
  • Given the U.S. economy’s reasonably good fundamentals, we believe that patient investors will get more treats than tricks in the future.

As a child I always loved Halloween, especially carving pumpkins, trading candy with my sister, and touring haunted houses. It has been a little less enjoyable to watch the ghosts of past crises resurface recently, creating fear in the hearts of some investors after an extended period of calm. But for investors with a longer-term horizon, there may be more treats than tricks in the future.

Economic growth and the capital markets experienced an extended period of low volatility in recent years. As a result, a sense of complacency had been building among investors. Historically, these periods of low volatility can last a number of years as seen by the VIX Index (a measure of expected volatility in the equity markets) between 1993-1997 and 2003-2007 (Exhibit 1). This environment was shattered suddenly in the past month.

Exhibit 1: CBOE Volatility Index, October 15, 2014

Massif Capital’s Top Short Bets In The Real Asset Space [Exclisuve]

Screenshot 2022 08 10 18.57.51 1Since its founding by Will Thomson and Chip Russell in June 2016, the Massif Capital Real Asset Strategy has outperformed all of its real asset benchmarks. Since its inception, the long/short equity fund has returned 9% per annum net, compared to 6% for the Bloomberg Commodity Index, 3% for the 3 MSCI USA Infrastructure index Read More