In a recent conference call to investors, Merrill Lynch’s chief investment strategist had some comments both about equity returns and volatility. “We still expect kind of reasonable returns. Our models are still forecasting a trend of about 7%. I emphasize it’s a trend,” he said. “…we thought volatility was going to increase in the financial markets around the world and get larger as the year progressed. There was a longstanding relationship between monetary policy and financial market volatility that really argued that 2007 would be a year of rising volatility. Many investors doubted that relationship because it had about a two-year lag time involved in it and people couldn’t believe that anything in this day and age would have a two-year lag time, but we tried to point out that there were many things in the economy that really did go a two-year lag time.”
Don’t forget you can visit MyAlerts to manage your alerts at any time.