8@eight: Wall Street rally to push ASX higher

By John Kicklighter
Updated October 6 2017 - 9:18am, first published 9:09am
The information of stocks that lost in prices are displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg
The information of stocks that lost in prices are displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg
MARKETS. 7 JUNE 2011. AFR PIC BY PETER BRAIG. STOCK EXCHANGE, SYDNEY, STOCKS. GENERIC PIC. ASX. STOCKMARKET. MARKET.
MARKETS. 7 JUNE 2011. AFR PIC BY PETER BRAIG. STOCK EXCHANGE, SYDNEY, STOCKS. GENERIC PIC. ASX. STOCKMARKET. MARKET.
Stock information is displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg
Stock information is displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg

Perfection. That would be what the markets seem to imply - at least the US markets. The rest of the world is not far behind however. Not only have the US equity indexes continue to charge to successive record highs, but the implied volatility measures across assets and borders continues to deflate to levels that would imply there is no chance that the markets could encounter an unfavorable dip in performance. Though increasingly securitised, volatility measures like the VIX (at a record low) still act as a measure of insurance cost. Investors have to make decision about what level of risk-reward they are willing to accept in these conditions. On the one side, the complacency view of 'if it's not broken, don't fix it' can take advantage of further stretch but can be poorly acclimated to move quickly in the event that conditions fall apart quickly. Alternatively, those that abide the 'this time is different' mentality may miss gains to be squeezed out near-term but can avoid any catastrophic reversals.

Smooth sailing

Subscribe now for unlimited access.

$0/

(min cost $0)

or signup to continue reading

See subscription options