VIX Fixation
Calm Markets Are No Reason to Bid Up Stocks
There's scant correlation between volatility and share prices, despite investors' fixation on the VIX.
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Low volatility is great, but it doesn’t mean investors should pay more for stocks.
It's been an unusually quiet time for U.S. equity markets. Stock watchers' favorite barometer of volatility, the CBOE Volatility Index, or VIX, has averaged just 11.1 so far in 2017 through Monday, making it the calmest year on record. (The lower the VIX, the lower the volatility, and vice versa.) The gauge has averaged 19.4 since its inception in 1990.