After Trump: The Persistent Discontent


Supporters of President Donald Trump rally at the U.S. Capitol on Wednesday, Jan. 6, 2021, in Washington. THE CANADIAN PRESS/AP, Jose Luis Magana

The shocking scenes of Trump supporters storming the capitol building on January 6th, sometimes jovially, other times with what seemed like murderous intent, may have permanently cemented Trump’s fate. He’s been impeached, again, and efforts are being made to prevent him from running for office in the future. He may also be facing multiple criminal charges and possibly even bankruptcy.

Explanations for the insurrection both over and under explain the problem. Yes, Trump is a demagogue and its true his supporters have been radicalized in a number of ways, including conspiratorial thinking and racist ideas about threats to white people and black lives matter. But as the saying goes, “the issue isn’t the issue”.

In a video about anti-vaxxers (people who promote ideas that are untrue about vaccines) the YouTube Channel WiseCrack pointed out that vaccine acceptance was highest during and just after the Second World War, a period of high confidence and trust in the government by the American citizenry. Today that confidence has ebbed to an all-time low, and that collapse in trust isn’t necessarily unwarranted. The rise of a managerial and technocratic elite has placed an unacceptable distance between citizens and their governments, while government failures seem never to lead to any improvements or accountability.

The cost of these mistakes remains high. In Europe it has led to Brexit, months of protests by “Yellow Vests” in France, the erosion of the center-left ruling party in Germany and a resurgent far right party, the decline of liberal democracies in Hungary and Poland, and a number of anti-establishment parties getting control of small countries like Greece and big countries like Italy.

Canada, forever looking reasonable and calm compared to other countries, is having its own struggles. Prior to the pandemic we had rail protests across the country, have shown a consistent inability to get large infrastructure built and continue to see the erosion of our manufacturing sector. Pandemic response itself has been a laughable mess, from overconfident and condescending pronouncements on the ineffectiveness of masks and accusations of racism about concern of the virus, to complete reversals of position. Vaccine acquisition and distribution has also been underwhelming. The federal government didn’t seem to get enough at the right time, and provincial governments have struggled to get the vaccine to those who most need it (This is nothing compared to the US, where health care workers are actually refusing the vaccine).

In this moment, China can make credible claims for being a useful alternative to the US and other Western countries in its growing sphere of influence. A competent dictatorship with substantial economic growth and a rising standard of living must seem appealing to autocrats and some global citizens alike.

There are other concerns too. The gap between Main Street and Wall Street has grown ever wider. During early months of the pandemic the collapse of jobs and business was mirrored by a resurgent stock market that began gaining steam even while the real economy was crashing. This disparity between the world of investing and the world we live in only heightens inequality concerns. Ownership of stock by Americans closely correlates with age, ethnicity, wealth, and education. For many people today, inequality continues to look like a political class consorting with a billionaire class that don’t play by the same rules that govern everyone else. In a pandemic Jeff Bezos gets rich, and you get fired.

This is obviously not universal. Different countries have different problems and the degree to which these issues are felt by individuals depends a great deal on background and government. But even if we assume that the American situation represents an extreme amongst Western nations, it should not blind us to the anger that people rightly felt when they learned of politicians and executives travelling outside of Canada while asking everyone else to cancel their Christmas dinners. Politicians of all stripes seemed to believe that they would be exempt from the restrictions they imposed on others and had a hard time fathoming that constituents would be upset.

Fixing these problems will not be easy. Technocrats, that is governing authority due to technical expertise, imbues our current leaders with a lot of confidence on issues where there may be no correct answers. They leave people blind to what they do not know and encourage authorities to rely on models and projections rather than real life.

Take for instance inflation. Governments and central banks are very concerned with inflation. Too little and the economy will not grow. Too much and the economy will stall while savings lose value. Inflation needs to be “just right” which is currently considered somewhere between 1% – 3%, with a target rate of 2%. According to Statistics Canada, the CPI since 2010 has been around 1.5%, just below the current 2% target. In other words, $100 in 2010 would buy roughly $85 of similar goods today.

But would it?

Inflation has been higher and felt more directly by lower income people. Using data collected by Statistics Canada (you can click the link below to download the spreadsheet with all these numbers and my calculations) for retail food prices between November 2010 to November 2020, we can see that many food staples have become more expensive in the last decade at rates in excess of core inflation. In that time, the price of beef has risen between 4% to 7% per year depending on the cut. Potatoes have risen in price over 10%, onions by 5.5% and carrots by 6.3% a year. Baby food rose by an average of more than 9% a year, and toothpaste by 8%. Almost none of the staple groceries tracked by Statistics Canada had price increases contained to the 1.5% official rate of inflation, instead many rose at rates double that or more.

Like real estate, another asset class that continues to defy gravity without an impact on inflation but a dramatic one on the population, a rising price of food that remains unaddressed only highlights the different reality Canadians seem to be living from our elected officials. Despite a great deal of lip service about the importance and risks facing the middle class, governments have yet to seriously tackle these issues, or make them central in elections. Instead we continue to deal with these problems in a patchwork of modest tax credits and empty rhetoric.

I, and I assume many others, would like to put the Trump era behind us and treat it as an anomaly. But to do so would assume that Trump had landed (as had Brexit and other populist movements) fully formed but alien to us, and that we had been taken by a madness that can finally be broken.

I think we know this is not true.

From the moment that Hillary Clinton called Trump supporters “Deplorables” (or half of them at least) there has not been a clearer delineation between those that control the cultural zeitgeist, and those who have come to resent it. We have a similar divide in Canada too, with Alberta constantly at odds with more “progressive” provinces over environmental issues, and Quebec (doing as it always has) putting its historic/cultural/religious identity ahead of more multi-cultural aspirations of equality. Toronto and Vancouver may sit at the centre of Canada’s cultural output, but these two economic powerhouses do not share much with the rest of the country.

Our prolonged period of peace, wealth and stability has tricked us into believing that unrest, dissatisfaction, and failure are aberrations. But the history of Canada, the United States, Great Britain, and other European powers has been one of long periods of unrest. William Jennings Bryan, before being disgraced in the Scopes Money trial, had been a tireless campaigner for agrarian populism. In Canada we too had an agrarian populist movement (interestingly enough, similarly conservative and steeped in conspiratorial anti-Semitism, prominent in Alberta and Quebec) that only really started to disappear after the mid-60s and not totally until the late 80s. Political dissatisfaction can have long legs.

Five people died as a result of the assault on the capitol on January 6th, and one was Ashley Babbitt, a Q-Anon, MAGA loving Trump supporter who had breached four lines of security in an attempt to overthrow the government on behalf of Donald Trump. But while her motives and goals were deeply misguided, her past remains a window into a dispiriting world for many Americans. A fourteen year veteran of the United States air force, Babbitt now owned a pool supply business that was struggling, forcing her into a short term loan with a 169% interest rate. Medieval Europe had better rules governing usury than California. Or consider the North Carolina woman who took to social media because she couldn’t afford the $1000 insulin prescription for her son. Insulin, among other drugs in the United States, has been reported on multiple times for its rising price. Despite that, no government or corporation has been able to act in such a way to curb the rising price of a life saving drug that been around for a century.

All this is baked into America, and represents a growing risk for the future. Though the country has a more dynamic market, holds more patents and has some of the largest corporations, the failure to consider the effects of pushing up stock valuations at the expense of everything else will likely only deliver diminishing results in the future, both for investors like you, but also for the global liberal order that provides much of the stability we rely on.

Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of Aligned Capital Partners Inc.

Some thoughts on the end of Donald J. Trump

President Trump, Evan Vucci AP

This was written on Friday, November 6th. Since then the election has been called for Joe Biden.

It’s Friday, November 6th, and Pennsylvania seems to be looking like it will go to Biden. With four battleground states showing narrow Biden leads, the math seems inescapable. Biden will be the 46th president of the United States.

The narrowness of this victory is unsettling. A record turnout for both Republicans and Democrats, the largest turnout since the 1960s of the electorate, the largest percentage of votes by visible minorities for a Republican candidate since Richard Nixon, only showed that American remains a polarized land. The hoped for “Blue Wave” as Americans repudiated Trump and his enablers did not materialize. The Senate will likely remain in the hands of Republicans. The House of Representatives may flip to Republicans too.

Even now, after all that has unfolded over the last four years, much of what brought Trump to power; anger at a failure of the establishment to protect jobs, uncertainty about the ethnic and cultural future of the United States, the erosion of the middle class, the simultaneous exhaustion of being THE global superpower while being blamed for being one. These issues linger, promised but unaddressed by Trump, ignored by his party and fueling alienation in the general populace.

Other, more persistent aspects of American culture have also been on display. Since Richard Hofstader first wrote his book Anti-Intellectualism in American Life in 1962 (He calls Eisenhower “conventional in mind, (and) relatively inarticulate” – cruel words for one of America’s best remembered Republican presidents) Americans continue to lament, often publicly, just how stupid they find one another. Whether it is over face masks, the environment, or conspiracies about “the deep state”, Americans remain shockingly divided, often down the middle.

But with Biden elected (presuming he survives all the legal attacks and mandated recounts) and once the final vote tallies are certified in a few weeks, a corner will have been turned. Trump, in his role as a lame duck president will likely shore up personal protections, lash out at allies that failed to defend him, denounce democratic institutions that have allowed for his failure, and presumably pardoning those in his close circle and looking to shield himself from any future prosecution. Biden will hopefully find some common ground in the Senate and House of Representatives that will allow business to proceed, but it seems safe to assume that the most ambitious parts of the Democrat’s wish list won’t make it into law. Similarly, hopes for a Trump sized stimulus package will now also be dashed by a Republican establishment always uncomfortable with Trump’s lavish spending but fearful of his wrath.

From the perspective of the investment world this seems to be a continuation of the status quo. Biden does not possess Trump’s unique skill at bullying, backed by the threat of his irate voters. Instead the hope will be that he can better negotiate with Republicans. But with the election leaving the GOP in a strong legislative position there will be little appetite for aggressive policy shifts. Instead we should expect tepid fiscal stimulus, continued strength in businesses profiting from the pandemic (like tech stocks) and a wider, more subdued recovery as we face the immediate economic uncertainty.

So often we think big things represent monumental shifts. The election of Trump was one such event, but in the end his legacy will be a great deal smaller, and I suspect better thought of, than we might guess now. His ignorance, narcissism, and sociopathy were critical flaws in a man that showed great skill in reading the American public. His few achievements, including peace between Israel and several Arab states, challenging China and striking some kind of trade deal, and boosting American military spending were not missteps. His useless forays into border walls and needless antagonism of American allies will not be missed. At the outset of his presidency he even had the foresight to surround himself with some accomplished and knowledgeable people. In the end Donald Trump’s biggest enemy was himself. Were Trump a more competent and less incurious man he could have been a formidable political force. Instead, his certainty in his own skill and inability to adapt made him an aspiring autocrat in search of a balcony.

To cultural observers, the election of Trump should be a reminder that small things that go unnoticed or ignored often prove to be bigger issues. The sudden mysterious outbreak of an unknown form of pneumonia in Wuhan at the end of 2019. The subtle shift in economic thinking by political leaders across the West. A demographic trend that sees a generation shrinking, maybe even incapable of marrying. The rapid economic growth of an often-overlooked part of the world. It may even be the surprising growth of visible minority voters for a candidate long believed to be their enemy. These quiet things, hiding in the corners, may be the issues that guide our future rather than the bombast of men like Donald Trump.

In 2015 I wrote that “You don’t have to love people like Rob Ford or Donald Trump, but their ability to change the political terrain, to question traditional assumptions about the electorate and undo the laziness of identity politics is healthy for a democracy, even when you don’t like the messenger.” Looking back on four years, I am only desiring a return to normalcy, but with so many of the issues that brought Trump to the White House still unaddressed I’m afraid that whatever normalcy Joe Biden can bring will be short lived.

Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of Aligned Capital Partners Inc.

Beyond Protests and The Police

While protests may not be, strictly speaking, market-based news, the size and scope of the protests regarding police violence and black lives makes them hard to ignore regardless of context. So far, these massive public demonstrations have not had an impact on markets (though they may yet on the spread of Covid-19), and have garnered a mixed reaction in the wider society. Whether police will be held to a level of greater accountability for actions that result in death remains to be seen, and regardless of what reforming actions are taken by police departments its quite obvious that it will take years to overcome distrust of authorities in some communities.

A more interesting aspect of the protests have been calls to “defund the police”, a rallying cry that either means exactly what it says, or sparks 15 minutes of explanations as it “doesn’t mean quite what it sounds like”. The arguments for it do make some sense though, and within some police departments there is sympathy for the idea that too much is asked of the police, resulting in a hodgepodge of policy goals foisted on a group simply not equipped to handle them. Currently the same people who have to deal with a domestic disturbance and oppose criminal gangs are the same people that have to help those with serious mental health issues and spend their days collecting revenue for cities. Not all these jobs should likely fall on the same person.

This raises an interesting point, which is how our political class has largely sidestepped any of the blame aimed at police departments. Police only enforce the laws that they have on the books, and true to any bureaucratic industry, we have lots of laws on the books. So many laws in fact that it is practically impossible to know what they all are. By-laws are added with little consideration for what has preceded it, speed limits seem set arbitrarily and may be subject to change, some laws are posted while others invisible. Which laws are enforced and where is left to the discretion of the police at the time. Many laws end up serving an unintended dual function, launched ostensibly to combat thing A, but end up serving issue B.

Consider that in 2008, Ontario passed a law making it illegal to smoke in a car in the presence of a minor, someone under the age of 16. This was part of a long campaign aimed at discouraging smoking in public that bore some superficial resemblance to other laws that discouraged smoking by making it harder to do in social settings. But where as smoking in public on patios and bars limited where you could go, this new law invited police into a citizen’s private space and criminalized behavior that was, at least under the laws of the province, still kind of legal. But the real issue here is who the law inadvertently targets.

Despite continued drops in the number of people smoking, those people that do smoke are statistically more likely to be poorer with more minimal education. According to the CDC 30% of people below and 25% of those at or just above the poverty line smoke, while those at more than double the poverty level only smoke at a rate of about 15%. In short the people most likely smoking in their car won’t be found in Leaside, but might be found in one of Toronto’s less affluent but already heavily policed neighborhoods. This law isn’t intended to target minorities or the poor, but put in the hands of police who are already tasked with policing higher crime areas (again areas that tend towards being poorer and with higher populations of minorities and new Canadians) it puts another class of previously non-offending people into potential confrontations with the police.

You may remember the death of Eric Garner in 2014. Another black American who died in the arms of a police officer that was caught on camera, Garner had been placed in a choke hold and had died from lack of asphyxiation. Garner’s crime, that had led him to this confrontation with multiple police, was for selling “loose cigarettes”. As part of a style of policing called “broken windows”, police had been instructed by the highest levels of authority within civilian politics to crack down on minor crimes to scare off larger criminal enterprises. Tackling the “loose cigarette” problem ultimately involved “the deployment of special plainclothes unit, two sergeants, and uniformed backup” to arrest a man selling cigarettes for a dollar who had been arrested 12 previous times. At no point did anyone wonder if this was a useful deployment of resources, or whether re-arresting a man who had already been arrest 12 times might finally break his habit.

You might be tempted to imagine that police would simply look the other way when silly or impractical laws find their way onto the books, but this too is a problem. Indeed, we know that the police can sometimes be given directives to enforce some laws over others. But the law cannot function effectively when it is applied only at the discretion by those in authority. If a law cannot be practically enforced or only enforced unevenly, it probably shouldn’t be a law at all.

Politicians remain responsive to their voters, particularly so at municipal levels. That can put enormous pressure on them to pass laws that are intended to fix social ills for moral reasons, but our politicians should be mindful that every law passed puts potentially puts citizens into conflict with the police. So long as the police remain the first line of citizen’s interaction with the state’s power, whether it be for jay walking, speeding, parking illegally, domestic disturbances, assault, or more serious illegal activity, any action can theoretically become fatal. Recently two young people died during police interventions in the GTA. The first was a young woman named Regis Korchinski-Paquet, who fell from a balcony during a mental health crisis when police showed up to take her to CAMH. The second, D’Andre Campbell was shot by police in his home in Brampton when police were called because he was having a schizophrenic episode. How culpable the police were in these events is the subject of much debate, but families in both instances have wondered aloud whether it is the police that should be the people who come during a mental health crisis.  

While Canada’s problems are mercifully not those of the United States (the proliferation of guns and the militarization of police are fortunately not major issues here), that shouldn’t excuse politicians who make noise about police excesses while being quick to use the law to fix minor grievances. While the police continue to do their own reviews and consider reforms, politicians should perhaps begin considering an audit of the numerous laws that we keep and whether it still makes sense to be ticketing people for jaywalking, working out in a park, or issuing fines to children who run a lemonade stand, especially when these laws can not be enforced with any consistency.  Whether our politicians can rise to meet even this challenge remains to be seen.

*In addition to the linked articles within this post, I have also referenced the book The End of Policing by Alex S. Vitale for anyone interested in the arguments of defunding or abolishing the police.

Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of Aligned Capital Partners Inc.

Who Will We Hold Accountable?

June is here and the summer promises to be hot, sunny and inviting. Yet Canadians are still struggling with the pandemic, with daily numbers still in the 100s of new cases and the curve being bent slowly. Far from crushing the pandemic or setting up a robust testing and tracing system Canadians are being reprimanded for being to close to each other in parks and watching the mayor of Toronto walk around incapable of wearing a mask properly.

These results are not nationally representative, but regionally specific. Quebec is currently the worst affected province, with Montreal the country’s epicentre for the virus. Ontario fairs only a little better, while the rest of the country is beginning to move to reopening. In all, while Canada largely sidestepped an out of control spike, we have failed to bring the virus under control.

Fighting the pandemic has taken an enormous financial and emotional toll, to citizens, to cities, and to the economy. Economic lifeboats to offset the worst of the effects have cost in the hundreds of billions and will represent a sizeable financial burden for the foreseeable future. That cost has been born willingly, with people foregoing seeing relatives and friends, risking the survival of businesses, and saying goodbye to loved ones who died in hospital alone, all in an effort to smother a new and existential threat to our well being.

But Canadians will be right to wonder whether our governments maximized our response and put our consent to be governed to good use, or did they squander it in bizarre and foolish ways? I’m sorry to say that it’s probably the latter.

Cast your mind back to March (roughly 100 years ago) and recall that the minister of health, Patty Hajdu had insisted that the coronavirus posed a minimal risk to Canadians. Questions about whether we should be wearing masks were dismissed as misguided and the idea that closing borders to people travelling to places that had been Covid-19 hotspots was considered useless or potentially even discriminatory.

What an innocent time.

Today masks are recommended (sort of) albeit reluctantly, borders are largely closed and social distancing is not simply a recommendation, but mandatory and enforced by private businesses. Concerns about racism have been buried under a growing mountain of evidence that China actively misled the world about the severity of the new epidemic while simultaneously buying as much personal protective equipment as it could.

Given the conceivable difficulty with getting people to “socially distance” responsibly, something that people have never done in a society accustomed to largely doing what it likes with little fear from its government, the political opposition to masks has remained particularly puzzling. What has struck people as one of the most simple and straightforward ways to improve safety by embracing an obvious form of precaution has been regularly opposed by every public health official for all kinds of reasons right up to the moment that they decided that it was a good idea.

Other concerns about our government’s handling of the pandemic seem even worse. Though Ontario and Canada at large were meant to be better prepared as a result of the SARS outbreak, at every turn it seems that its quite the opposite. The national stockpile turns out to not have been much of a stockpile at all. Ontario’s own stockpile was largely destroyed in 2013 when it was supposed to expire and not replaced at the time (in a cruel twist of irony that expiry date was revealed to likely have been too early). In a recent interview, when Dr. Theresa Tam was asked whether concerns over pandemic preparedness had been presented to the cabinet she was cut off by the Minister of Health and reminded that all conversations with the cabinet are private.

The only thing that might have made up for all these missteps would have been an effective test and trace system that would have over-tested the population so that it could get out ahead of the virus and proactively isolated carriers. By comparison testing remains well below where it needs to be to accomplish this. In fact, to get a clear sense of just how far behind we are on the testing consider that in Ethiopia (ETHIOPIA!) the capital is testing people door-to-door! Meanwhile, here in Toronto it’s unclear whether you should even go in for testing or just stay home.

This isn’t a political rant. I’m under no illusions that another party or another leader might have made better or more decisive decisions. If anything multiple parties are to blame for the failed efforts to deal with the pandemic at every level of government. If I needed to find a single example that encapsulated the level of this failure, please consider that last week the Toronto Star reported that the TTC was trying to find out if they could legally enforce wearing masks on buses and subways! Months after a pandemic has ravaged people’s lives and eroded billions in wealth, only now does the TTC aim to see if it can enforce the most basic form of prevention for buses and subways. Even a cursory glance at where most of Toronto’s cases have been are aligned with poorer neighbourhoods that depend on more public transit.

These questions aren’t academic, and they aren’t partisan. The stakes are very real and the crisis will have a long reach into the future. Canadians have spent the last decade acquiring sizeable debt anchored by home values, with governments and banks happy to pretend that this debt was a form of wealth. Today the financial situation looks considerably worse, and one way to mitigate the damage to the economy would be to reopen the economy with confidence. Sadly, in the hands of our existing political class, such a thing remains out of reach.

Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of ACPI.

Vexed by the VIX

This past week a number of articles spilled forth regarding the VIX index being at record lows. If you aren’t familiar with the VIX, that’s quite okay; the VIX is an index that tracks the nervousness of investors. The lower the VIX is the more confident investors are. The higher the VIX, the greater the concern.

At first glance the VIX seems to clearly tell us…something. At least it seems like it should. The index is really a measure of volatility using an aggregate of prices of options traded on the S&P 500, estimating how volatile those options will be between the current date and when they mature. The mechanics aren’t so important for our purposes, just that this index has become the benchmark for the assumed fear or comfort investors have with the market.

So what does it mean when the VIX is supposedly at its lowest point in nearly a quarter of a century?

Historic VIX
This is the historic performance of the VIX. Data provided by CBOE.

Because we live in the 21st century, and not some other more primitive time, we have the best technology and research to look to when it comes to discerning the meaning of such emotionally driven statistics. Its here that the the area of study of behavioural economics and investing supposedly cross paths and that we might be able to yield some useful insight from the VIX.

Motorola RAZR V3_1
What is this, 2007? Might as well be the stone age!

Or not.

The holy grail of investing would presumably be something that allowed you to accurately predict changes in the market based on investor sentiment. Though over time stock markets are meant to be an accurate reflection of the health and wealth of an economy, in the short term the market more closely tracks a series of more micro events. Investor sentiment, political news, potential scandals as well as outside influences like high frequency trading and professional traders pushing stocks up and down all make up daily activity.

The VIX seems like an ideally suited index to then tell us something about the market, and yet it probably isn’t. The problem with research into behavioural economics (and its other partner, big data) is that it is great at telling us about things that have already happened. The goal, that we could use this information to change or alter human behaviour, is still a long way off (if it exists at all). Similarly the VIX is basically great at telling us stuff that we already know. When markets are bad the VIX is high. When markets are good its generally low.

Skiing in pants
Bad forecasting can lead to terrible outcomes.

Thus, the VIX represents a terrible forecasting device but an excellent reminder about investor complacency. When markets are “good” (read: going up) there is a tendency for investors to ask for more exposure to those markets to maximize returns. If you feel uncertain about the future, investors and financial advisors are less likely to “drift” in terms of their investing style, but if people feel very good about the future their far more likely to take their foot off the breaks.

Screen Shot 2017-05-18 at 2.00.19 PM
Yesterday’s selloff followed news that Trump’s Russia problem wasn’t going to go away, but remain a permanent feature of his administration.

Real market panics and crashes tend to be triggered by actual structural problems. 2008 wasn’t the result of too much confidence about the future from investors, but because the market itself was sitting on a bubble. That the VIX was low only tells us what we already knew, that we weren’t expecting a financial crisis.

Trump-Jail
We can hope.

With markets down sharply yesterday its tempting to see that this level of investor complacency/confidence harbingered the most recent sell off. But that’s not the case. Trump is, and remains, a kind of nuclear bomb of unpredictability that must be factored into anyone’s expectations about the markets. But what we should do is consider the VIX a mirror to judge our willingness and preparedness to deal with unexpected events and market downturns. If you’ve started to assume that you can afford growing concentration in your portfolio of high performing equity or that you don’t need as many conservative positions, you should take a long hard look at why you feel that way. Maybe its just because you feel a little too confident.

Like everyone else.