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The deficit levels of the Japan government are among the highest of the developed countries, and expected to increase in the coming years.
This is not good news for Japan. As the rating decreases, the extra premium paid to borrow money goes up. So, a 3% cost of borrow might increase to 4%.
Anyway, this is something to watch as the United States deficit to GDP is increasing rapidly.
CLICK FOR FULL ARTICLE – S&P DOWNGRADES JAPAN FROM AA TO AA-
There are many indicators out there for helping to inform which way the markets are headed. None of them are perfect, or exact, or even able to be taken into account alone and without context.
This week I discuss the CBOE Volatility Index (VIX) and how it’s negatively correlated with the equity markets.
The fact that it’s at extremely low levels right now makes me concerned.
Take 2.5 minutes to watch/listen to my video
TRANSCRIPT:
This week I’m thinking about volatility index. I mentioned two or three weeks ago on my annual preview, that I was concerned that the, Vix, the “V,I,X,” which is the volatility index is very low. So I’m going to throw up a couple of charts up on the screen here. So that you can kind of see that when the market has a tendency to go down, volatility dramatically goes up. It doesn’t necessarily mean that one is a leading indicator versus a lagging indicator, but they are, they are correlated. And it’s something that I kind of watch for. If you look at April of last year, April of 2010, they really start, the volatility dramatically goes up right as the market through April, May, and into June, really, really wasn’t very good.
As I throw up a 5 year chart, you can see that at various times, the same thing happened. That the volatility goes up when the market goes down. And so the fact that it is down right now does not mean, it being down, the Vix is at a very low number, it’s between 16 and 17, right now, then it does not mean the market is going to go down. As a matter of fact, with quantitative easing, I would actually argue that the market is going up because of the quantitative easing. It may continue to go up. This is just one of the things to watch for.
A client asked me the other day, you know, what are some of the indicators that I use, and I look at, etc.? And I have to tell you, it is not just one. It is many many, many different technical indicators. It is many, value of the whole market, but you know, for me, if you’ve been watching my videos, diversification. Because even if you are wrong on the indicators you’ve got to be very very well diversified in many different asset classes, etc.
Anyway, I just wanted to talk a little about the Vix, how very low it is and how it correlates with the market many many times.
My name is Mike Brady. Cambridge Investment Research, is my, I’m a registered rep of. My company is Generosity Wealth Management in Boulder, CO. My phone number- 303.747.6455. And you have a wonderful week, bye bye.
Every wondered what the 2008 Financial Crisis was all about? The Big Short by Michael Lewis is a good, gripping book that explains much of it. I highly recommend it.
But what are some of the lessons we can take from this crisis as outlined in the book?
That’s what this week’s video is about.
Take 4 minutes to watch/listen to it.
The actions the Fed are taking today are inflationary, pure and simple. This bodes well for the future.
CLICK FOR FULL ARTICLE – YOU WANT TO BE BULLISH?
This week is my annual 2010 review and 2011 preview.
I start out by talking about what I got right and wrong from my 2010 preview 12 months ago (you mean I’m accountable?)
I then talk about reasons to be bullish countered by reasons to be bearish on 2011.
I conclude my video with specific actions I’m taking with my clients. This includes
* What I’m doing with my bond exposure
* How I’m allocating amongst large cap, mid cap, and small cap
* What I’m watching as an indicator of market health
* What sector I like for a long term buy over the next decade
This is my 2011 action item video. While I want you to watch all of my videos that come out each week, if you can only watch one then this is the one.