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In 2016 the markets shrugged off one significant event after another to set new record highs and finish the year in positive territory. Aside from weak economic and business fundamentals the S& P 500 or Standard and Poors 500 Index shrugged off 5 consecutive quarters of falling profits, 6 consecutive quarters of falling revenues. Two substantial political shocks in Brexit and the election victory of Donald Trump, an increase in interest rates and, minor events two numerous to mention. Despite all this the S&P 500 saw the fewest drawdowns in history based on the number of days that the index deviated 3% or more from its 52 week high. Given that the VIX or Volatility Index has also been a near model of calm of late as well and I’m remined of the period from 1994-1999 that turned out to be the calm before the storm, a period that featured more volatility than that seen last year.


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