Scapegoats for Waning Volatility

Take personal responsibility. No blame games. That is Mark Gilbert’s point:

“Hedge funds, already the usual suspects whenever financial markets go awry, stand accused of suffocating the very market anomalies they rely on to beat their less adventurous peers in the investment community. The “prosecution” alleges that with $866 billion chasing identical strategies, any arbitrage opportunities in markets where hedge funds are active disappear too fast for anyone, including the hedge funds, to make a buck. It all smacks of sour grapes from those who either regret not jumping on the hedge-fund bandwagon, or are struggling to turn a profit this year. Traders and investors feed on volatility. The bigger the price swings of a stock, bond, commodity or whatever, the greater the profit potential. When markets flatline, it’s harder to make money or, to use the current odious idiom, to “generate alpha.”
Mark Gilbert
Bloomberg News

Volatility ebbs and flows…just like price movement. Keeping track of volatility and responding to current levels with a direct plan of attack — separates the winners and losers.