Martin Gilbert: Why investors should prepare for a harsh thaw melting away some gains

Air of complacency

Last week I was in New York meeting with clients. While the snow and freezing temperatures ensured there was a chill in the air, my bigger worry was the air of complacency among investors.

Like other stock markets around the world, the S&P 500 and Dow Jones were recording all-time highs. Meanwhile, the much followed VIX index has been showing stock market volatility at extremely low levels for some time. There is certainly much to be positive about. Our economists expect global growth to come in at almost 4% this year, well above the lacklustre growth rates of most of the post-financial crisis period. Despite the strength of economic activity, inflation has remained remarkably subdued, allowing the world's major central banks to keep monetary policy loose, or tighten only ...