Volatility is back in the markets. On July 17, following the Malaysia Airlines disaster in Ukraine and the Israeli land invasion of the Gaza Strip, the Volatility Index (VIX) of implied S&P 500 Index volatility surged 32.2% in one day, to 14.54. This and the long bull market the US has experienced since 2009 have caused many investors to regain interest in forms of downside protection for their stock portfolios. In this column, I’ll discuss three downside protection strategies for nervous investors –options, variable annuities and asset allocation—but before that, for context, let’s review some recent market history.
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