The Volatility Measure

May 5, 2022

The VIX index is often referred to as the fear gauge. It tracks the volatility of the S&P 500. Over the last 30-years, the VIX has been below 20 approximately 62% of the time (which signifies investor complacency). The VIX tends to rise when the S&P 500 is declining and investors are fearful. Since 1990 the stock market has tended to see positive returns during the 12-months following a high VIX reading. As Warren Buffett has said, “be fearful when others are greedy, and be greedy when others are fearful”.