Where did all the fear go?

Years of cheap money means investors' risk tolerance across all asset classes has been seriously distorted. But investors are about to get dragged out of their comfort zone.

One of the more bizarre facts of recent years is the convergence of stock and bond market risk. However, as you can see from looking at chart 1 below, it is not that bond market risk is out of whack, but rather a function of equity volatility being at historically low levels (1 - see footnotes).

Chart 1: Stock Market Risk v. Bond Market Risk

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