The High Risk of Long-Term Low Volatility

The video discusses the historically low volatility in the S&P 500, comparing it to past periods like 1995 and 2006. It highlights current market risks, particularly in the sovereign bond market, and suggests strategies for managing these risks, such as buying options. The discussion also covers global economic risks, including Brexit and commodity price fluctuations, emphasizing the importance of hedging against uncertainties.

What historical event is mentioned as a time when the VIX index dipped below 10?

• The 2006 bull market

• The 1995 market crash

• The dot-com bubble

• The 2008 financial crisis

What is one suggested strategy for dealing with uncertain markets?

• Holding cash reserves

• Short selling stocks

• Buying options

• Investing in real estate

Why are options considered a cost-effective way to hedge against market risks?

• They guarantee a profit

• They limit potential capital loss to the cost of the option

• They offer unlimited profit potential

• They require no upfront cost

What is one of the risks that market participants are unprepared for, according to the transcript?

• Currency devaluation

• Interest rate hikes

• Inflation

• Deflation

What global events are mentioned as having caused uncertainty in the S&P 500?

• The US presidential elections

• The COVID-19 pandemic

• The rise of cryptocurrency

• China's economic changes, plummeting commodity prices, and Brexit