Word: prediction
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...status and convenience in two breezy words: Charge it. But in these leaner times, shoppers are thinking twice before pulling out the plastic, even as analysts predict credit-card defaults could total more than $75 billion this year. On April 23, Barack Obama and his economic adviser Lawrence Summers met with credit-card executives to discuss how to control our addiction to plastic--and curb the controversial practices that encourage...
...attempts to predict the volatility of the S&P 500 index over the next 30 trading days using options data from the index's 500 underlying stocks. Specifically, the VIX is a weighted average of the implied volatilities from a large basket of options. That may sound like an indecipherable description, but it basically means that it's a cumulative index of uncertainty. Of course, it only makes full sense if you know a bit about option pricing...
...perfect, nor is the sense of volatility it attempts to predict. Volatility can mean many different things in practice: a stock whose price undergoes large price fluctuations and one that chops quickly in a small range might have the same measured volatility, but they are clearly not equally risky. Even though the concept of volatility is abused and taken for granted in the financial world, it is still the best-known measure of risk and, therefore, useful for investors. (See the best business deals...
Because the VIX is supposed to predict near-term volatility, the VIX calculation only considers options expiring in the next two months. The VIX is measuring "very near-term fear." While many investors look to the VIX as an indicator of a bottom to the market, it does not possess much long-term significance...
...turned out that an Italian seismologist, Giampaolo Giuliani, had warned a few weeks ago that an earthquake was likely to strike the region, but officials had poured cold water on his work and accused him of spreading false information. Many scientists still believe that it is impossible to predict earthquakes, and many people that it is impossible to adequately guard against them...