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Is Low Volatility Lulling Investors Into A False Sense Of Confidence?

Is Low Volatility Lulling Investors Into A False Sense Of Confidence?

We've all had that perfect day - muted wind, mild temperatures, and a blue sky without a cloud in sight - yet couldn't help but feel that something was wrong. By the next morning, a storm raged outside and all vestiges of sunshine and pleasantries were gone.Trading in the current market environment might feel eerily similar to that first day -- the calm before the storm.

In the past year, the S&P 500 has marched forward for a gain of 10.47% without tripping over potential landmines like falling oil prices, the Russia/Ukraine incident, and downbeat global economic revisions. It's almost as if risk hasn't been an issue at all. Take a look at the VIX over the past five years: Other than a few spikes above 20 in October, December, and January, volatility has been relatively muted in recent months...

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