As stocks swing, investors bet choppy markets are here to stay

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Many expect inflation, uncertainty over monetary policy and stretched valuations to keep stirring asset prices this year, even if geopolitical fears subside

After a turbulent start to the year, investors are betting stock market volatility isn’t going away anytime soon.

“This is not just Ukraine ... investors understand that this is not going to be an easy year,"said Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions, which provides risk mitigation strategies for institutional investors. “We don’t necessarily see new post-COVID lows for the VIX anytime soon,” said Max Grinacoff, equity derivative strategist at BNP Paribas, who has been recommending strategies such as put options spreads, which are designed to offer protection against volatility.

The elevated valuations could make stocks more vulnerable to bad news, potentially increasing volatility, said Patrick Kaser, portfolio manager at Brandywine Global Investment Management. Meanwhile, Goldman Sachs analysts recommended investors buy call options, which target higher prices, on interest rate sensitive stocks including financials like Bank of America and Wells Fargo.

 

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