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Wall Streets low-volatility run among longest since 1940s.


Wall Street's low-volatility run among longestsince 1940s


Financial markets have been marked by low volatility for about a year, placing the period on the list of longest such runs since the Second World War. But often, such times of tranquility end in strife. “Low volatility periods do not have to end in tears, but they often do,” Goldman said in research last month. The New York investment bank identified 14 other extended periods of low vol. The current one, which began last June, remains below the 16-month median lifespan, and is far from the longest, which stretched from July 1958" March 1962. While analysts note that predicting one particular trigger that will ignite volatility is difficult, “wars and terror attacks”, along with financial and economic shocks tend to be leading culprits:
Historically volatility spikes and large equity drawdowns have been hard to predict asthey often occur after unpredictablemajor geopolitical events,such aswars and terror attacks, or adverse economic or financial

Major causes of volatility spikes over the years

The chart below highlights some of the major causes of volatility spikes over the years, including the beginning of World War II, start of the Cold War, assassination of John F. Kennedy and the 9/11 terror attacks.

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