Current very low volatility levels are masking true investment risk but stochastic models can assist advisers, writes Eric Armstrong
For many years, stock markets behaved in a relatively more consistent manner, with a gradual improvement in the main indices reflecting steady progress. Unfortunately today, equity prices, along with other asset prices, have been sucked into the experimental vortex of central bank activities such as quantitative easing. In the recent past, we have had several "once in 20-year" events including the tech bust, Lehmans and the great depression. The extreme policy decisions (that have also saved investors' skins, it must be noted) have created artificial investment conditions that are...
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