00:00 Julie Hyman
It’s avoiding the worst case scenario in trade wars that has sent volatility back down here after the spike that we saw after the reciprocal tariffs were first announced, and markets, for lack of better term, freaked out, because it was unexpected the numbers that we saw. So, here you have, over the past two months, what we have seen in terms of the drop in volatility, it’s about, from peak to trough, again over the two month period, about a 35 point drop. That’s the third largest that we’ve seen on record, dwarfed only by what we saw in May of 2020, and then going back to December of 2008. All of this according to Bespoke Investment Group. So, why should we care, you might ask? And that’s because of what we see that what happens after these big drops in volatility. What Bespoke says is that seeing a drop like this would normally imply that we would have seen an even bigger recovery in stocks since then, perhaps approaching as much as 50% instead of the 20% or so we’ve that we have seen climb from the low. So, what now? Bespoke says, doesn’t mean a lot for short-term stock returns, but they say again, if you go back and look at the history of when we see patterns like this, if you go out in the 6 or 12 month periods, you do tend to see more positive returns for stocks. Like with anything else, a lot of caveats here, there are no guarantees, past performance does not guarantee future results. But Bespoke specializes in looking at these types of historical patterns to try to figure out what comes next, and their view then, and as history might indicate, 6, 12 months out from here, we could see stocks higher than they are today, Josh.
03:29 Josh Lipton
Thank you, Julie.
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