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2018 Charts of the Week

Volatility Index

Chart of the Week for February 9, 2018 - February 15, 2018

The VIX has been volatile at the start of 2018.

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 February 6, 2017 through February 6, 2018. As equity markets were generally increasing throughout 2017, the VIX traded as low as 9.1 on November 3, 2017 and generally stayed in a small range. Since the start of 2018 however, the VIX has risen 207.1%, from 9.8 on January 2 to 30.0 on February 6, including reaching an intra-day high of 50.3 on February 6. Market strategists note that while underlying U.S. economic conditions continue to be strong, factors including government policy uncertainty, rising interest rates, and a feeling that equity markets may have risen too quickly in 2017 all contributed to the recent volatility.

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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