The Need For Managed Volatility – Systemic Risks

This is the first in a five part series in which we will discuss why a Managed Volatility approach is prudent for investors today. To begin the series of articles let’s start with the macro topic of, Identifying Systemic Risks.

Many investors today are in disbelief about the sustainability of the current bull market. As the market climbs a wall of worry, it is important to understand where the demand is coming from that keeps the market moving higher. With that understanding investors can begin manage the macro risks of the markets more effectively. It may also explain why US equities have outperformed most other asset classes for the last few years.

It is not the purpose of this article to identify all of the systemic risks that could derail the markets, as much as it is to provide an example of a large risk that can be marginalized with a Managed Volatility approach. It is also important to mention that there are several ways to manage volatility, each with their own advantages, disadvantages, and cost structure.

In today’s article, the systemic risk worth exploring is “What Will Happen When Companies Stop Buying Back So Much Stock?”

What Will Happen When Companies Stop Buying Back So Much Stock? businessinsider.com

Corporate stock buybacks have driven stock prices higher over the last several years. These buybacks cannot continue indefinitely…