Related previous post: Howard Marks Memo: Political RealityHoward Marks: Oaktree Has 'Amped Up' Caution, Selectivity (video) (LINK)
It’s Getting Scarily Quiet in the Stock Market [H/T @jasonzweigwsj] (LINK)
Calm has descended on the U.S. stock market.
The past 30 days have been the least volatile of any 30-day period in more than two decades. Only five days during the most recent stretch saw the S&P 500 move by more than 0.5% in either direction, the lowest since the fall of 1995.
Back then, the Federal Reserve was paused between rate cuts. This time around, a combination of the summer lull in trading and super-easy global monetary policy has helped drive volatility to levels seen only a dozen times in the past half-century.
...Faith in how far central banks will protect against losses comes and goes, though. In market-speak, the Yellen put is less out of the money if a smaller price fall pushes the Fed to act. At the moment, investors seem to think the put is barely out of the money at all.
The danger, then, is not so much complacency about markets, but complacency about central banks. The lesson of the past seven years is that policy makers will step in every time disaster strikes. But investors tempted to rely on the central banks should note that disasters did still strike, and markets had big falls before help arrived. The time to buy insurance is when it is cheap, and for the U.S. stock market, that is now.
Temperament is a skill - by Seth Godin (LINK)
Related book (also recommended highly by Nassim Taleb): Explaining Social Behavior
Investing quote of the day (which I've posted before, but am thinking about again today):
“…what I have observed about the really great investors is the simple decisions that they end up having to make by virtue of focusing on what’s important and what’s unknowable.” -Tom Russo