A Quote by James B. Stewart
Low-volatility funds, which tend to smooth out performance, have been especially popular since the financial crisis. The PowerShares S&P 500 Low Volatility Fund is the oldest, begun in 2011.
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Outperforming the market with low volatility on a consistent basis is an impossibility. I outperformed the market for 30-odd years, but not with low volatility.
Because of that [Brexit], you're going to have slow growth and, unfortunately, while there may not be huge volatility, there will be volatility.
The true investor welcomes volatility ... a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.
The success of the stock connect program and the increased market volatility means investors are looking for more products to access China markets performance than exchange traded funds, and futures are feeding that rising demand.
We make too much out of past performance, and it's very misleading to investors. It causes them to move money around. They buy a fund that's hot and then it turns cold as all hot funds eventually do. And then they get out. Well, buying at the high and selling at the low isn't going to leave you a satisfied shareholder, right?
Alan White and I spent the next two or three years working together on this. We developed what is known a stochastic volatility model. This is a model where the volatility as well as the underlying asset price moves around in an unpredictable way.
Not since the Depression has the state been this dry, have our rivers been this low, our water table this low, and our reservoirs this low.
Every time I get accustomed to low volatility, like we were towards the end of the Greenspan era, and we think we have all the levers under the control... something erupts to remind us that the idea that anybody is in control of everything is hubris.
Briefly speaking, our conclusion is that stochastic volatility does not make a huge difference as far as the pricing is concerned if you get the average volatility right. It makes a big difference as far as hedging is concerned.
The Fed contributed to the financial crisis, keeping interest rates too low for too long. I give them credit for responding and stabilizing the economy and the financial sector during the crisis. But then they tried to do too much with quantitative easing that went on forever, just dramatically exploding their balance sheets.
There is little room for complacency, and it is important to guard against sporadic volatility in financial markets.
We need a federal government commission to study the way our financial services system is working - I believe it is working badly - and we also need more educated investors. There are good long term low-priced mutual funds - my favorite is a total stock market index fund - and bad short term highly priced mutual funds. If investors would get themselves educated, and invest in the former - taking their money out of the latter - we would see some automatic improvements in the system, and see them fairly quickly.
If we observe the performance of only those funds that remain active, we will tend to find that the average performance of the surviving funds exceeds that of the market.
My low point was after being reorganized out of running Merrill Lynch. That dismissal deeply contradicted my sense of fairness, since, at the time, my team and I had done what we were brought in to do: We had turned Merrill Lynch around from the depths of the financial crisis.
If we're concerned about volatility of earnings because we want some more stability in our lives, then let's create, instead of an unemployment insurance system, an earnings insurance system that will moderate the volatility for a certain period of time until we get back on our feet.
China should have a currency which is a much higher value relative to the dollar and other things. What they're doing is keeping it low, artificially low. And I mean seriously artificial. I don't just mean a little bit low. I mean major low.
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