Now I’ve heard everything. Mark Mobius says low market volatility is tied to social media:
Social media is having a huge impact,” the executive chairman of Templeton Emerging Markets Group said in an interview during a visit to Tokyo. “It’s creating confusion with a lot of false news,” he said. “Ironically, it’s having a calming effect.” “If you have all this confusing information, and you don’t know which one is true and which one is false, you say, OK, the heck with it, I won’t do anything.
My .02? Analysts are espousing every reason for depressed volatility except the obvious: Bull markets lack volatility. Just look at the chart below. Today’s bull market is normal versus prior experience. And low-volatility regimes have run for extended periods of time. The current path below VIX 20 is less than a year old, which is still young by historic precedent.
So let’s not overanalyze. Low volatility is a bull-market phenomenon. And it seems obvious that bull markets cause depressed volatility, rather than the other way around. We acknowledge that risk increases with the duration of low-volatility regimes, but the same can be said of other bull-market phenomena such as time spent above a moving average.
I’m a fan of Mark Mobius, and “left-field” theories are always welcome. But can we please stop obsessing over the VIX?