In the US they have the VIX Volatility Index which has become known as the ‘Fear Index’. If you look at the equivalent index for Australian equities, the Australian ‘Fear index’ rocketed during the GFC and on a rolling three year basis is still high, we are still fearful, despite an eighteen month equity market rally and the reason we haven’t ‘gotten over it’ is because of something called ‘Sequencing risk’.
Basically the GFC has had a much larger and lingering impact than you might expect because it occurred just at the wrong time for a lot of retired or retiring investors. Let me explain.
Sequencing risk...Continue Reading