Well, here’s an interesting statistic. The VIX currently stands at 20.35 as I write, up a monster 8.2% on the opening. The average level since inception is 20%. So stocks are at about average volatility at the moment.
Take a look at the graph showing the complete history of the VIX. What’s interesting is that, on the way up, when the VIX reached 25%, it always subsequently went up to 30% – at least that’s the way it looks from eyeballing Yahoo’s graph. Interesting, no? It means that if the VIX gets up to 25%, it probably a good idea waiting on the sidelines for it to get up to 30, and then start buying in what presumably will be a panic. The VIX can of course go up to 40 and beyond, but those are pretty rare events.
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