Low Volatility And "Unknown Unknowns"

The CBOE VIX index touched unusual low levels Monday and Tuesday, only similarly closing under the 10 level 10 previous times in its history, a Source report noted. The historic low volatility has caused “unease” among a majority of investors, according to a recent Bernstein report. But Source Head of Research Paul Jackson and Director Andras Vig say don’t worry, it’s not that big a deal.

Low volatility amid a global expansion period is normal

The current low volatility regime “is not that unusual,” Jackson and Vig write in a May 18 report titled “Shhhhh…”

Working on the basis of “where we are in the economic cycle,” they operate under the thesis that when...