VIX Hits 33-Month Low

The Volatility Index (^VIX) dropped down to 15.32 today which is the lowest it has been since July 2007.
There seems to be a widespread assumption that lower volatility is good and higher volatility is bad. I’m not so sure. When the financial crises started to get serious, the VIX was only in the teens. It soared during the fall of 2008, and it was still very high one year ago when stocks were a great bargain.
I looked at the numbers last year and found that a lower VIX isn’t strongly correlated with better returns, although there was some out-performance when the index is very low (i.e., less than 13).

Posted by on April 12th, 2010 at 1:03 pm


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