Cost of Hedging Weekly Update 11-1

Posted on November 1st, 2012

Believe it or not, very little changed in the cost of hedging this week. The market has stabilized at the retraced levels we saw last week and the cost of hedging has stayed in the same range.
See data for the past 15 months on our Resources Page
Forgive me as I add a little personal perspective this week.
Without a doubt, the stability we’re seeing in the cost of hedging is a testament to the strength in the U.S. financial markets. It really is quite amazing that in the midst of the devastation that hurricane Sandy has caused in the NY area we able to see a calm and orderly market.  Natural disasters happen all the time, but what the traders are experiencing on a personal level can always leak into the way they manage money. However, we’re not seeing that like we did after September 11th, 2001. Of course the events aren't comparable, but there was a chance that infrastructure damage can strike fear into the market. And let's remember, fear and greed drive the market.
The jobs number scheduled for Friday should add some volatility to the markets, but the election is really the factor everyone’s discussing. And while it’s tough to tell how the outcome will drive the short and longer term performance of stocks and bonds, we should be able to rely on an orderly transition of power that we experience every 4 years in the U.S. to keep the markets from going haywire.

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