Having been on the wrong side of the market in 2009, Gluskin Sheff’s David Rosenberg is doubling down his bearish bet. It’s the smartest course of action for him at this point — so expect market volatility to double in 2010:Bloomberg: “We’ll be in a year of heightened volatility,” Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto, said in an interview. “We’ll see periods in 2010 where the VIX will be north of 30 in a period of risk aversion as the economy and earnings very likely fail to hold up to expectations. I see more of a 30 to 40 range in the VIX.”
Rosenberg, 49, the former chief North American economist at Merrill Lynch & Co., the brokerage bought by Bank of America Corp., says investors are underestimating risks to the global economy. “There’s just a general level of complacency in the marketplace right now,” he said.
“The cost of buying insurance to guard against a possible decline in equity valuations is currently very low. That’s very low because most investors don’t believe they need it.”
One would imagine that he’s loading up on options. By his words, they’re dirt cheap right now since they price-in only half the market volatility that will actually occur.
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