Debate logic with your acquaintances, And practice rhetoric in your common talk; Use music and poetry to quicken your mind; Turn to mathematics and metaphysics when you can stomach it.
- TheTaming of the the Shrew
To be a good analyst you need more than just math and quant skills. You also need more that finance knowledge. You need to have a complete set of skills that mixes logic, rhetoric, and math. All have to be practiced on a regular basis to be part of your everyday thinking.
If number be lacking
It maketh men dumb
So that to most questions
They must answer mum
The Ground of Arts - Robert Recorde
Recorde invented the equal sign in the mid-16th century and was an important English mathematician. I like this quote because ti presupposes that you need to have numbers to answer most questions. He would have made a good quant today.
Volatility is on the rise with the VIX strongly moving above three-month averages except for the Fed announcement spike in December. This is the first full month of the new Trump presidency, and the uncertainty has resulted in risk-taking caution.
The overall stock market was down 1.3% (SPX), but small caps declined by 5.7%. The Treasury bond index posted a gain of 1.54%. What was most important was the differential between low volatility (4.67%) and high beta stocks (-4.89%). Similarly, there was a strong difference between consumer stables (5.70%) and consumer discretionary (-9.37%).
All this suggests that the markets are discounted uncertainty and likely slowdown in economic growth. There is less euphoria and more of a belief that we are in a position of market change.
