The CBOE MKT VOLATILITY IDX (VIX) measures volatility in the stock market but it is generally called the fear index. If you had invested in fear on Monday morning, you would have realized a 34.21% profit in four days.
Playing Monday morning quarterback is no way to live your life and this is not the point. While the “experts” will drone on about the meaning of volatility/fear in the market, this is not the time to wait and see. The statement I commonly hear is “we have seen this before and the market always comes back”.
Really? Our national debt precludes an economic recovery without draconian spending cuts. Even if these cuts are made, Bernanke’s statement yesterday concerning the state of the economic recovery also indicate no stock market recovery for several years.
The passage of the “Twist” yesterday by the Federal Reserve has resulted in a loss of over 7oo points on the New York Stock Exchange. The reality is that no economic recovery is coming and that the Federal Reserve has absolutely no tools left to change it. And maybe that was the plan from the beginning.