Capital market volatility is a critical factor in the financial lives of retirees and near-retirees.

Volatility plays a major role in the pricing of many different types of annuities, and volatility is the major driver of sequence of returns risk.

2009 was a year of extremes in terms of volatility.  Consider, for example, an exchange traded fund (VXX) that seeks to replicate the CBOE volatility index (VIX).  This ETF hit a high of 119 in February of 2009 and then went as low as 32 in December 2009—a decrease of 73%.

Noted investor and publisher Marc Faber believes that the United States will ultimately experience inflation rates that approach the extremely high levels seen in Zimbabwe during the past year:

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”