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Pragmatic Capitalism

Practical Views on Money & Finance

VIX: Seller Beware

By Surly Trader

It is amazing what a new year and abundant investor liquidity can do.  Despite the tax increase that really does nothing material to balance the budget, the markets have sighed a major relief rally early in 2013.  One of the most striking results has been a significant decline in the VIX (see chart below).

On Friday, the VIX hit an intra-day low of 13.64 which is a hair away from the multi-year low of 13.39. This occured despite historic realized 10 day volatility of about 19%, 20 day volatility of 15.4% and 50 day volatility of about 14%.

With the debt ceiling debate coming to the forefront, I would imagine that a decline in the VIX from here is exceedingly unrealistic.

Got a comment or question? Feel free to contact Cullen via email here or on Twitter here.
Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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