Low Volatility Influenced by Uncertainty


This week’s Sentiment Survey special question asked AAII members what they thought about the low level of volatility that has existed so far this year. Responses were mixed. Nearly one out of four respondents (24%) find the ongoing calm market conditions surprising or are otherwise cautious about how long it can last. Politics—particularly uncertainty about President Donald Trump—was the primary reason given. About 21% have a positive view of the ongoing calm market conditions. Slightly more than 19% think the low level of volatility will not last and will be followed by a market correction. Approximately 16% describe the low volatility as being normal or a sign that the market direction is in a holding pattern or otherwise view volatility as not being a big influence.

Here is a sampling of the responses:

  • “Just when you think you’ve seen it all, you get low volatility with a volatile political situation.”
  • “I think the market is uncertain about the many black swans that could emerge, but investors have no place else to go.”
  • “I think it reflects the uncertainty associated with the Trump administration.”
  • “Market rose because of perception about tax reform. Anticipate some reform, but not sure how quickly.”
  • “It will not last. Volatility will go up a lot in the second half of the year.”

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