Release Date: May 21, 2010
BUFFALO, N.Y. -- It is not terribly surprising to see jumps in prices in either direction, says Christian Tiu, professor of finance at the University at Buffalo School of Management. "With volatility that high, we can see big swings in prices -- much like the one at this morning's open."
What causes this volatility in the markets? "Simply put, it's the lack of certainty on where the economy is going. Tiu says. "For example, will the European Union survive in the current form? And how large the U.S. exposure is to the EU? When will we see inflation rising in the U.S.? How will the new financial reform affect the markets? Will the real estate markets recover by the time when commercial mortgages are due to refinance in 2012-15?"
These are all questions without an answer, Tiu points out. "Traders guess, but their guesses are widely different, sending the stocks in the roller coasters we see."
For contact information for Tiu and additional commentary, go to http://newstips.buffalo.edu/tip/67.