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Is a Sleepy Market Threatening Investors with New Risk?

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Don’t be lulled to sleep by this market. Just because there haven’t been any real neck-snapping moves, up or down, doesn’t mean there won’t be any. Unfortunately the trade that favors a tepid market is getting more crowded by the day. What’s worse is that the investors coming in aren’t the big players, it’s mom & pop. The DailyShot details the story:

Equity Markets: Anecdotal evidence suggests that short volatility trades have made their way into the retail world. It seems that mom & pop investors are loading up on XIV – an ETN that shorts near-term VIX futures (just as bigger investors have apparently pulled out). The short vol bets have done well. The fact that it’s a derivative contract that lost over half of its value in 2015 over a couple of days doesn’t seem to bother anyone.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.