CHART OF THE DAY: Returns After Investing In VIX 30

The interesting thing about volatility is that it does have some predictable patterns. Consider the last 10 years of the VIX as an example:

• Over the last decade, the VIX has breached 30 exactly 9 times
• If you had bought the VIX when it breached 30, you would have made money 8 out of 9 times over the next 30 days
• The average gain was +6% for the SP500 over those periods
• The only time this batting average didn’t hold was in March 2020 when we were in #Quad4

As always, we play the game in front of us. Perhaps this will be the 1 out of 9 times that the SP500 loses money? Perhaps not. As a gauge of volatility, the VIX measures investor psychology. Therefore, a rapidly increasing VIX typically represents the puking (to use a scientific term) of stocks.

But as Warren Buffett famously said:

“Be greedy when others are fearful.”