Volatility ain't Dead--2/5/2018
For the better part of 2017, the VIX index (a measure of the volatility of the S&P 500) was hoovering around all-time lows. The market, essentially, went straight up in 2017 and this resulted in record low volatility.
Today, the VIX Index shot up 76%. Not "so far this year the VIX is up 76%." Rather, today ALONE the VIX spiked up that much.
For all those market watchers who thought volatility was dead, I guess you are wrong. This market can be jittery and these market participants can show their worries. Frankly, this type of market reaction to fear and worry are important to the functioning of a healthy market. Prior to this sell off, the S&P was on pace to post annualized returns for 2018 of over 75%. If that were to happen, that would be a very unhealthy thing.
This correction should have taken some of the froth out of the market's pricing and returned some saneness to the investment community. Could it go lower from here? Of course. But at least from this level, the trajectory of the market is more sustainable and healthy.