The VIX

Markets sometimes have rogue periods of increased volatile movement. The most popular way to measure this is the volatility index (“VIX”) which is published by the CBOE.

Many times, when people write about the VIX they refer to it as the “fear” index. I think that’s some of the best time series marketing since “golden cross” and “death cross.” So, it makes sense financial writers get excited to call it that.

Ultimately, volatility is important to track as it typically indicates some level of stress on the market. In the case of the Financial Crisis in 2008, there was a very clear correlation between that volatility and the economic conditions of a recession. But, other times, markets just have a spurt of volatility.

So, the next time markets seem a little crazy, check out the VIX. After all, it is the “fear” index. Spooky stuff.

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