Have you ever wondered how billionaires continue to get RICHER, while the rest of the world is struggling?

I study billionaires for a living. To be more specific, I study how these investors generate such huge and consistent profits in the stock markets — year-in and year-out.

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One piece of analysis I have not seen, however, is an assessment of the relative risk and uncertainty for equity markets in some of the more important euro zone nations. Specifically, Spain , Italy , France  and Germany. The chart below attempts to offer up that very information, using 30-day implied volatility  for the various country ETFs over the course of the past six months:

• Spain (NYSEARCA:EWP) (red line)
• Italy (NYSEARCA:EWI) (blue line)
• France (NYSEARCA:EWQ) (green line)
• Germany (NYSEARCA:EWG) (yellow line)

Looking at the chart, what initially catches my eye is the recent evolution of the two-tiered risk system. In the first half of the year, the higher risk is clearly associated with Italy and France, whereas Spain and Germany appear to be considerably less risky in terms of implied volatility. By the March the risk appears to have lessened across the board and the distinctions between individual countries is more difficult to discern. Over the course of the last 1 ½ months or so, a new two-tiered system has appeared. This time around it is Italy and Spain where the risk to equities is considered to be the greatest, with France now joining Germany in the lower risk tier.

In essence, Italy has persisted in the high risk tier and Germany has been a constant in the lower risk category. Over the course of the past few months, the interesting development has been the switch between France and Spain, with the former improving from being a peer of Italy to a peer of Germany, while Spain has moved in the opposite direction.

One could certainly argue that all four countries are in the same boat (taking on water, with shoddy life preservers, in shark-infested waters and being one small mutiny away from having no captain…), but clearly investors think there are important distinctions to be made in terms of equity risk and uncertainty. Perhaps of more interest, these fortunes appear to be shifting, with little perceptible difference not just between Spain and Italy, but also between Germany and France.

[source(s): LivevolPro.com]

Disclosure(s):  Livevol is an advertiser on VIX and More

Written By Bill Luby From The VIX and More    

vixandmore.blogspot.com/ ) blog and an investment newsletter from just north of San Francisco.  His research and trading interests focus on volatility, market sentiment, technical analysis, and ETFs. Prior to becoming a full-time  investor, Bill was a businessstrategy consultant for two decades and advised clients across a broad range of industries on issues such as strategy  formulation, strategy implementation, and metrics. When not trading or blogging, he can often be found running, hiking, and kayaking in Northern California.  Bill  has a BA from Stanford University and an MBA from Carnegie-Mellon University.