Stock market volatility index (VIX) falls to the lowest level since May 2007
According to Freakonomics blogger and Yale professor Ian Ayres:
“One of the most important but under-reported financial indicators is the CBOE’s Volatility Index (^VIX), which measures the market’s expectation of future volatility in stock prices (over the next 30 days). (The CBOE has written a nice technical white paper describing how it is calculated, here.) When it drops below 30 percent, it will be a strong indication that the market correction is complete and we’re back to business as usual.”
Often referred to as the “fear index,” the VIX represents one measure of the stock market’s expectation of volatility over the next 30-day period (Wikipedia). The VIX is a widely used measure of market risk and it is often referred to as the “investor fear gauge” (Investopedia).
The chart above shows that the VIX Index closed today at 13.45, the lowest level since May 2007, more than five years ago, and more than six months before the recession started in December 2007. Investor fear in the stock market has been consistently subsiding, and market volatility is now back to normal, pre-recession levels