Market graphic - The outlook for volatility
Victor Consoli, head of high-yield research and corporate credit strategy at Bear Stearns in New York, explains the implications of an end to the low-volatility environment
The Vix volatility index has historically maintained an inverse relationship to the market: 'when the Vix is high, it's time to buy,' as the saying goes. The current reading of 11.8 implies that the S&P 500 will trade in a range of between 11.8% higher or 11.8% lower two-thirds of the time. The Vix, therefore, is largely a sentiment tool. Nearly everyone likes a rising market (or at least a stable market), and volatility tends to drop as the market is perceived to have less risk. Volatility has
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