What investors are getting wrong about the VIX

Published On Sep 4, 2024, 6:00 AM

Recent market fluctuations were marked by a sudden spike in the VIX, a volatility index often misinterpreted as an indicator of fear. Following a significant market drop driven by external shocks, many investors are overlooking the historical patterns surrounding the VIX. It is important to recognize that a low VIX does not guarantee market stability, as it can be an opportune time to hedge against potential volatility that historically tends to rise during this period. Analysts warn that volatility typically increases leading up to significant market events in the fall, and caution that recent market recoveries may be misleading.