Traders: Expect volatility to spike, but wait for your pitch
by Michael Sincere
If you’re a trader, you thrive on stock market volatility. You are also in the minority. Most investors hate volatility, and as you may have noticed, so does the Fed and their central bank partners.
Most investors want a low-volatility market environment. Not surprisingly, whenever there is a wisp of market volatility, Fed members offer soothing words, making implied promises of lower interest rates and new QE programs. So far, it’s worked like a charm.
The downside to a low-volatility market is that we’re in uncharted territory. When investors awaken from their long slumber, the downside could be horrific. Imagine when volatility resurfaces and investors fear they’ll be the last one out the door. No stockholder wants to be a “stuck-holder,” so they will sell in a panic.