Re: Latest VIX says SELL
mInvestor
10/30/2011 12:35:10 PM
I didn't get time read this in time. But the market volatility in the last week gave another example on how to calculate and analysis it. Great article, and just in time for everyone to refresh this concept.
May need more time to dig into it. Thank you, Fred.
Re: Latest VIX says SELL
Phoenix
10/19/2011 9:54:22 PM
Yes thank you Fred for the analysis. I guess along with all the technical indicators one has to use his own common sense to make the best decision.
Re: Latest VIX says SELL
Tenacious
10/19/2011 2:56:24 PM
I don't think exiting the market on the signals of any one indicator is a good idea. However, I firmly believe in adjusting the total equity in the market based on a group of indicators with which an investor has become familiar and comfortable.
In addition to the use of indicators to adjust the size of investments relative to the cash portion of your portfolio, I am solidly behind the use of stop losses for all of your holdings.
Clearly the VIX Oscillator is not sufficient for these adjustments without considering other indicators, but few would take the position that an investor would be worse off reducing the total investment by selling at least a portion of under-performing positions each time the indicator "went red" and adding to the winners or buying new positions when it went green.
Perhaps less would have been made in 2005 and 2006, but the shortfall would have been more than made up in 2007 and 2008. I know that from my personal experience and the experiences of my clients, both recently and in the period between 1997 and 2002.
Re: Bogus calculations
Tenacious
10/19/2011 12:00:46 PM
It just comes down to this: Few people understand technical analysis as well as Fred!
Re: Bogus calculations
AskAsa
10/19/2011 11:38:03 AM
Readers often find coercion even conspiracy behind news articles.
Very few people in media are clever enough to pull off such intrigue.
In all likelihood the mistake was the result of a broken calculator and a researcher having a bad day.
Re: Latest VIX says SELL
tokyogai
10/19/2011 9:10:15 AM
I think there needs to be a mix of technical signals along with a sanity check of where the market actually is and what the sentiment is in the market. The VIX and other measures are useful, but they are only inputs to the decision, not the decision makers. That being said, it is still easy to move at the wrong time.
@Fred
Never knew how many technical metrics could exist, and be reasonably explained in short articles.
The historical performance chart is interesting, botth for good calls and not-so-good. If I'd gotten out on the first VIX signals to SELL in 2007, that could have saved me some losses. However, there were several signals in 2005 and 2006 that look like I would have simply sold on a dip and missed the gain.
I wonder if we'll look back on the current SELL signal and know it was a good idea to sell S&P now.
Well, it's difficult to avoid letting my feelings about the Mayor of NY introduce a bias, but I have to say it is more likely insufficient research by the author than anything else.
Fred, Do you think the Bloomberg story was just sloppy calculations or an attempt to coerce investors to feel one way or another? I know you can't say for sure, but what's your hunch?
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