The VIX rose 70.33 points on Friday, the highest it has ever been since the VIX birth in 1993. But having this great ind
ex does not seem to help us according to Ryan Larson, head equity trader at Voyageur Asset Management. Grynbaum interviews him as he says, "The VIX is a self-fullfilling prophecy. It's almost adding to the problems." The VIX promotes panic among the stock holders as when the media picks up the record high fear points, every freaks out and thinks they have to sell their stocks.But it's meant to endorse a new revenue stream and primarily. “The first purpose was the one that is being served right now — find a barometer of market anxiety or investor fear,” Professor Whaley, who now teaches at the Owen Graduate School of Management, Grynbaum writes. Apparently it has had a good record according to Grynbaum. "It spiked in 1998 when a big hedge fund, Long-Term Capital Management, collapsed, and after the 9/11 terrorist attacks." Bottomline the VIX is supposed to offer guidance for marketors and stock companies.
Now America, what do you think about this VIX? Is it a good index and a reliable source for stockholders? Don't discredit it right away because it has a negative impact. Do the benefits outweigh the risks? You decide. And by the way, vote early!
4 comments:
I think the VIX is one of many measures that can be useful to us as we try to make sense of our world and what seems to be an overwhelming array of crises, disasters, and individual and collective troubles.
Alone, the VIX looks very alarming, and could incite panic, exacerbating an already-bad situation.
But, when it is viewed as one of a large assortment of indicators of the welfare of our world, it can be instructive – it gives us a little more information to explain how we got here and how to get out of this mess.
If greed is indeed a significant cause of our troubles, this rise in the VIX might be good news – perhaps this is the wake-up call we need to introduce some fear and motivate us to change the “system”.
The best and most complete information should be made available to those who will apply it thoughtfully and appropriately, even though that same information may be misused by others
Each year many people put money into the stock market in hope of gaining some interest on it, using it as a place to keep money and what not. Because of this the stock market system and aparently the VIX are very serious systems. Something so serious and powerful rises and falls because of greed and fear. How can we as citizens of the United States just risk our capital with a system that could fall, like it has, because people are scared. Tons and tons of money has been lost, even from my parents retirenment plans, and it is disgusting to me that people are so greedy and careless.
I think the VIX is something the stock market needs as a source but I do not think people should solely basic their decisions from the VIX. Even though the economy is not at a place we would like it to be, by people trying to sell all their stock due to the VIX increasing, it will put American in a worse situation. I agree with the idea of the VIX being used for guidance and that is what people should use it as and not something to fear.
Quite honestly, most of the people who invest in the stock market are not very knowledgeable in economics or how the market works. Many use the market like they would use casinos, as a way to get lucky and make quick easy money. They may not know anything about how the market works, but buy stocks that their friend may advise them to buy or a TV show may say is hot. That is why I think the VIX may be a bad thing for the majority of traders. Many will panic when they see the VIX going up and sell their stocks. This in turn will only make the market go down and our economic health deteriorate. This is evident by the governments recent efforts to make the recession seem less than it really is in order to stop panic. Instead of calling it a recession they call it an economic downturn which sounds less severe. Obviously the government has learned from the Great Depression and is doing everything it can to keep trader confidence in the market and in the US banks.
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