Skip to content
Subscriber Only

There’s a Reason People Are Worried About Low Volatility

  • Subdued volatility is ‘lull before the storm’ in most cases
  • Investors sometimes turned ‘deaf, dumb and blind,’ study says
Video player cover image

Longview CEO Says Market Largely Indifferent to Trump

Investors and policy makers who have worried about the historic slide in stock volatility the past year might have had good reason to do so: most market crashes are preceded by exactly that pattern.

A study of 40 financial-asset bubbles conducted by researchers including Didier Sornette at the Swiss Finance Institute concluded that in about two-thirds of the cases the crashes followed a spell of lower volatility -- the "lull before the storm." The study didn’t comment on current market levels.