Stock price volatility continues to decline

One of the fundamental tenets of our Chicago Quantum Net Score model, and our portfolio management and investment theory, is that investors prefer less risk.

Investors see risk (historical or expected price volatility) as a cost of holding an asset. This is similar to the cost of interest rates you could earn if you invested in risk-free assets.

Investors are willing to trade expected future returns to reduce risk. We see this in the higher valuations for companies that earn a profit, and especially those which also have low/no debt leverage.

​So, when we see stock price volatility continuing to fall in our equally weighted portfolios, we think that the demand for U.S. equities has a quiet support. This may be why stocks have not fallen further, or it could support a next price movement higher.

Our run from last night, using data for one year through October 4, 2023, shows that price volatility is down again, and continues to fall.