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Market Volatility


That’s an understatement, huh? The market volatility of late has been amazing. The Chicago Board Options Exchange Volatility Index (VIX) tries to measure what near-term market volatility will look like. It attempts to do this based on S&P 500 stock index option prices. Basically, the greater the perceived risk of owning stocks, the higher the volatility, the higher the VIX. You can see from the chart below that it was quite high in May 2010.

So what does this mean for you and me?
Here’s the bottom line: we can’t control the market or the market’s volatility. So we have to focus on the things we can control, namely our behavior in regards to this market craziness. Here’s what I’m doing in response, please join me and try to:
Continue to spend wisely. Keep saving and investing regularly. And focus on the long-term.