Worries about the stock market

dow4.jpgThe Dow falls another 63 points, dropping to a four-month low. There are the usual concerns about Europe on the cusp and banks out of control and housing going nowhere fast, but the broader question is whether these down days are more than a temporary blip. From Barron's:

The Chicago Board Options Exchange's Volatility Index, also known as the VIX, might be at a relatively subdued level, but this so-called market fear gauge could soon be higher. This is evident in the increasingly defensive-related options positions that industry experts are suggesting to clients. "At this point in the volatility cycle, we believe each new tremor is incrementally more likely to be the beginning of the next, inevitable shock," Jim Strugger, MKM Partner's derivatives strategist told clients Monday, sounding a warning echoed around Wall Street.

Even the NYT editorial page is sounding an alarm:

American stocks have doubled in price since the market hit bottom three years ago. But trading in the United States stock market has not only failed to recover since the 2008 financial crash, it has continued to fall. In April, average daily trades stood at 6.5 billion, about half their peak four years ago. By comparison, after the market busts of 1987 and 2001, trading recovered within two years. In fact, going back to 1960, trading had never declined for three consecutive years, let alone four and counting. Investors haven't just hunkered down, they have headed for the exits.

Chart: Dow for the past month; NYT


More by Mark Lacter:
American-US Air settlement with DOJ includes small tweak at LAX
Socal housing market going nowhere fast
Amazon keeps pushing for faster L.A. delivery
Another rugged quarter for Tribune Co. papers
How does Stanford compete with the big boys?
Those awful infographics that promise to explain and only distort
Best to low-ball today's employment report
Further fallout from airport shootings
Crazy opening for Twitter*
Should Twitter be valued at $18 billion?
Recent stories:
Letter from Down Under: Welcome to the Homogenocene
One last Florida photo
Signs of Saturday: No refund
'I Am Woman,' hear them roar
Bobcat crossing

New at LA Observed
On the Media Page
Go to Media

On the Politics Page
Go to Politics
Arts and culture

Sign up for daily email from LA Observed

Enter your email address:

Delivered by FeedBurner


Advertisement
Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
LA Observed on Twitter and Facebook