It certainly has been an eventful year for the stock market: After
the S&P 500 returned more than 4 percent in each of the first
two months of 2012, it then proceeded to drop by more than 6 percent in
May. Yet the market's primary measure of volatility, VIX - also known as
the investor fear gauge - has been relatively calm recently, and has
even dropped in the past week.
The long-term mean for
VIX is 20; a reading of 30 is supposed to indicate extreme fear on the
part of investors. As of earlier this week, the number was sitting it
around 25, indicating more volatility than normal, but far from a panic.
Is
that a good thing? It depends on whom you ask. If investors aren't
showing much fear even after a 6 percent drop in the market, it shows
that their confidence has not wavered. On the other hand, some market
experts fear that the lower reading simply means there is further for
this market to fall, in several senses of the term.
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