Now that the VIX index is at its lowest levels since May 2008, and down nearly 80% from its record high in late 2008, there is a growing concern among some investors that there is not enough fear in the marketplace. As the chart below indicates, the current level of 17.55 is lower than the long-term average of 20.3 since 1990. However, during the mid-nineties and the middle part of this decade, which were both good periods for equity investors, the VIX not only traded at and below current levels, but it also remained at those levels for several years.
While the VIX's decline over the last year indicates that investors are not as fearful as they were a year ago, can you blame them for not being so? Things haven't quite returned to normal, but they are a lot closer now than they were then.
Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.