2017 Charts of the Week

Volatility Index

Chart of the Week for September 8, 2017 - September 14, 2017

The VIX has been volatile in recent months.

The Chicago Board Options Exchange ("CBOE") Volatility Index ("VIX") is a key measure of investor expectations for equity market volatility risk over the forward 30-day period. It is considered a good barometer of investor sentiment and is often referred to as the "fear" index. A high VIX level is generally associated with a period of increased volatility and uncertainty in the market, while a lower level corresponds to less volatility and less stress in the market.

The VIX can change dramatically as investor concerns change as noted in the chart above covering the period of January 3, 2017 through September 5, 2017. For the period shown, the VIX reached a high of 16.04 on August 10 and a low of 9.36 on July 21. The August 10 value was the highest close for the VIX since the U.S. Presidential election in November 2016. Market strategists noted the August spike may have been caused by economic concerns about discussions regarding the debt ceiling combined with political concerns about U.S relations with North Korea.

Spikes in volatility cannot be predicted and fear of volatility or continued volatility without a long-term plan may lead to imprudent decision making. Prudent investors should base decisions on their own circumstances taking into consideration their goals, investment experience, time horizon and risk tolerance and not just the latest movement in the market.

© Copyright 2018 ICMA Retirement Corporation, All Rights Reserved. This information is intended for educational purposes only and is not to be construed as investment advice or a solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed here. Past performance is not necessarily indicative of future performance.

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