5 BIG Mistakes You're Making with the VIX Index

VIX is synonymous to the fear index. It's not a timing tool. It's not to say, "Oh, it's spiking. Run for the gates." And that's what people do. People panic.

It's not an easy thing to use when the VIX is at a peak. The market is generally at a bottom.

Phil, I read the Wall Street Journal every day. I can't write a better script for volatility.

Watch the VIX. Watch it closely. Watch it daily or weekly. When it hits these ranges or these blocks as you say, know what your plan is. That's when you should take action. Unfortunately, that's when most people are sleeping. If you start running for the gates, you just broke the cardinal rule.

Welcome back to another episode of We're Talking Money. We've been in a series called What the Pros Watch, where we're discussing what pros use as professional metrics to determine how to invest wisely. And today we're talking about a special topic, otherwise known as the VIX.

It's not an easy thing to use. And I say that because it shouldn't be a hard thing to use, but so many people get it wrong, Spell, and I know we're going to talk about that. We're going to figure out how our viewers can learn to use it correctly, share that with them, and as we go through that, we'll point out where all the mistakes tend to be made.

Yeah. So, back in March of 2020, the VIX spiked, and I mean hard, big time, over 80, which was the highest on record. And we should also say that VIX is synonymous to the fear index. Most of the time when we see VIX spike, people panic. Phil, do you think that that's an appropriate response?

No. That's not at all what you're supposed to do when the VIX spikes. That's not what it was meant to be. It's not a timing tool. It's not to say, "Oh, it's spiking. Run for the gates." And that's what people do when the VIX hits 40 or 50 or 60 or 80 as it did in 2020 or 80. Couple just like it did back in '08. It hit around 80 and people are running for the exits. 100% wrong move to make.

Yeah, for sure. Phil, you've been managing money for a little over 30 years now. So, you've seen the VIX do all kinds of things.

Sure.

Let's look at a visual real quick. Let's take our viewers to our one of our charts we put together for today, and I'd like for you to walk us through what you see and bring your experience to the table over the last 30 couple years.

So let's transition for just a second and before we get into that, Phil, maybe you can give us a little bit of a background on what the VIX is.

Yes. So, a lot of people just know that it's what it is referred to as a fear gauge or a greed gauge, whatever you want to call it. I don't think of as I don't ever consider it a fear gauge. People call it that. I just think of it as a good wind sock. It helps me understand direction of the market. Helps me understand where volatility is likely to present and it helps me understand when I might want to lower or raise cash to be better positioned for what we might perceive as buying opportunities on the horizon.

Got it.

But not, oh, VIX is doing this sell or buy. It's not perfect timing, but it is a great wind sock.

This what we have on the screen, Phil, and what I put together, and I'd like for you to walk us through this. Okay. The black dot in the center between moderate and high is our sample VIX of 25. So, that's sort of our benchmark that we're going to look at today. That dot sits between moderate and high, the orange section and the red section. Would you agree that the sample that we have here, a 25 is in between moderate and high?

Yeah, I think that's pretty good. It's a pretty good way to see it or to display it for our viewers. A VIX today trading at 17 or wherever it finished today, but right around 17.

Okay.

I'd say that pushes you back. That's certainly in the moderate range. I wouldn't call that low or the lowest, but it's well within what we would consider a low volatility range. So, it would actually get almost back to the green section on your chart. So, a VIX 15 to 20, that's a really comfortable range. That's a good range. Falls within the averages and you would refer to that as a stable market or low volatility market.

Okay. And then part of today is to talk about how to utilize these things if you're going to try and do this on your own, which good luck if you're trying to do it on your own. It can be done, but it's difficult.

Yeah. Takes a lot of discipline and you got to if you're going to use charts or things like VIX or other tools, you're going to use them, you got to live and die on the sword.

Yeah.

And so you can't have them yet not act on them. So if it's part of your discipline, then you got to make sure you use it. I think that's where so many investors fail. It isn't that they it's not that tools are not available. It's that they don't tend to use them or they get fearful or they get scared when the fear index is telling you to do something.

Yeah.

And then they think, "Oh my goodness, what if I'm what if this isn't right?" So paralysis by analysis can set in. You got to have conviction. You got to have the stomach for it. And if you're not willing to take, you got to take action. Y if you don't do that following your discipline, then none of these tools are going to work for you.

I got it. So, speaking of taking action, if you determine or the VIX is in line with say this green bar or low volatility, what would you tell the average investor that they should be doing?

Well, depends on what their goals are, but true. But if your goals are to own equities or to own whatever it is you're looking at and whatever you're using the VIX to help you understand better, which primarily would be equities, right? This thing is the number on the VIX whatever it happens to be today around 17 that's based on the next roughly 25 to 35 days of option contracts, calls and puts, and the combination there gives us a reading so that we understand exactly what is the expected volatility.

Got it.

So what would I tell people? Well, if we're in a comfortable range, if we're in a low volatility range, that could very well be a time to accumulate assets or to accumulate equities. But it's not a given. You still need to look at those equities and understand why you're buying it and if they're priced right, because even in a low volatility environment, you can still have equities that are way overpriced or potentially way underpriced. So you still have to do your homework on

Yeah.

the fundamental side and maybe even technical side if you like technical analysis, but you can't, you never want to just buy into the market blindly unless, as we talked about on other shows, if you're dollar cost averaging say in a 401k, then you do it blindly.

Y right.

You just keep putting the money in because you're buying at an average lower price, right? But in this case, to your question, Spell, if it's low volatility, that 15 17 range, then you buy, but always be careful of what you're buying and know why you're buying it. Know if it's valued properly, but that's all that's a good place. Low volatility is a good place to get into the market.

So, the dollar cost averaging example, I'd like to stay there for just a second. So, I'm contributing to my 401k plan. And I get paid every other week. Every other week, a portion of what I'm paid is deferred into my 401k plan. So that's the dollar cost average into the market or into my 401k plan that has investments. You're saying that if I'm dollar cost averaging, it doesn't necessarily matter. I'm doing that blindly because I'm going to do it no matter what. Right? Am I understanding that?

That's right.

Okay. Let's say we pull out of the 401k environment for just a second and let's put this ball in the hands of the OmniStar portfolio management team where we're not necessarily dealing with dollar cost averaging into a 401k plan. And let's say that to juxtapose the low-vol environment, let's go to the extreme or the purple.

Okay.

All right. What is a professional manager doing or what have they already done? If we are getting into the more extreme continuum,

They're buying.

Okay.

Yeah. Of course, they're looking at fundamentals or their technicals, whatever they use to properly analyze a stock or whatever positions they want to own happen to be, but mostly they're buying.

Okay.

Right. We're not looking at an extreme reading on the VIX saying run for the hills. We're not running away from the market. You're actually leaning into it because there is a high correlation, about as high as you can get. When the VIX is at a peak, the market is generally at a bottom. Okay? So, if you start running for the gates at the peak of VIX because you hear about volatility that's coming to town, you probably just walked away and did the you just broke the cardinal rule, which is never buy high and sell low and you just did it if you're buying when that VIX is peaking.

So, you're late to the party

100%.

If the volatility index has peaked,

Yep.

you should have already raised cash.

Yep.

Hypothetically.

Yep.

You should have already raised cash. And if you think that we're peaking, that cash is probably getting deployed.

Well, not if you think we're peaking, okay? But if it's beyond certain levels, for example, we know that 80 or above has only happened two times since the VIX was created, 2020 and '08. And we look at both of those and we know that they mark the bottom of a market.

Yeah.

You don't have to get to 80 to see this.

Yeah.

But if you're at 50,

Yep.

45, generally you can see strong correlation to a market bottom. So you're not waiting on it to get to the peak. You want to be positioned well before it gets there.

Hold that thought. Okay. We have a chart that we pulled today from our Bloomberg terminal and this shows two different metrics. The first and the primary of the show is volatility index. Okay, that's the white line.

Okay.

The other is the S&P 500. That's the orange line. So, what you're saying is if we've peaked and you mentioned 2008 and 2020.

Yep.

Yeah. 2020. Those we saw abnormal readings on the VIX or extreme.

Yep.

And so walk me through this chart and walk our viewers through this chart and tell me, maybe give our visual learners some schooling.

Yeah. So I think it's great to always pay attention to these kind of metrics.

Okay.

When you see something, the VIX is tried and true. It's been around for a long time. Again, it's not a

Early 90s, right?

Yeah. Been around since early '90s. It's not a perfect timing tool.

Yeah.

But it is a great tool to help you gauge where volatility is and when it might begin to rear its head. And volatility, by the way, is not a bad thing. Volatility is opportunity. If you understand how investments work, if you're a short-term trader, you love volatility. If you're a long-term type investor, volatility is still good because if you're trying to determine when and how to deploy cash or if you want to be a little more active in your strategy, these kind of charts or these metrics can really help you gauge when it makes sense to raise some cash or get a little more conservative or when to deploy cash, get a little more aggressive or and retool your allocation.

Maybe you've had a lot of exposure. You're not in cash, but maybe you have a lot of cash equivalents, bonds, whatever. You might want to roll out of some of those as you see a market beginning to get frothy. And the VIX will generally give you some evidence of that.

Gotcha. So let's go back here to this line or this peak back in 20 08. So, in 2008. So, on the left side of the screen is where you're directing people.

That's right. And so maybe you can see this cursor as I'm putting it up there.

Y

So this peak marked a bottom back in the financial crisis.

Yeah, sure did.

So it marked the bottom. So what you don't want to do is you don't want to get here, Spell, when you're up here and say, "Oh my goodness, this VIX has screamed to the upside, stratospheric almost. I got to run for the floodgates." And that's what a lot of people did in that instance. They got so fearful and they said the world is melting. Let me get out.

Yeah.

And so yes, they were right to believe that the market had volatility. But you'd be wrong to think that when it gets that high, that's so abnormal. The higher the VIX goes, generally the sooner we can mark the bottom of a market.

Got it?

And that's exactly what happened. Now, if you fast forward, notice how quickly it comes down. And I think that's the other part that people miss is the rate of change on VIX. When it goes up, it's typically rapid. And when it comes down, it's rapid.

And so, you don't want to miss that rate of change. That's very important. So, when you go from say 80 down to 30 or 20, the market has pretty much finished. It may still have a little bit of residual volatility, but it's pretty much missed or it's pretty much finished with the extreme bouts of volatility. And if you didn't get in when it was up at 80, you missed a great opportunity.

Now, you can still get in. It falls to 50, still have an opportunity. So, the market hadn't recovered at that point, right? But the longer you wait and the more you allow VIX to come down and get back into a reasonable range, the less likely you are to pick up stocks when they were really discounted.

Got it.

If that makes sense.

Yep. Definitely makes sense.

Now you come forward to the place that you were talking about here in 2020. 2020 record on the VIX. You notice it stands a little bit taller than it did over here.

Yep.

Right. So, when again we saw that, look at what it does right here. If you can see this for our viewers, perfect correlation, the peak and the trough of the market. Perfectly correlated. If you started selling because you couldn't take it anymore and all of a sudden you say, "My goodness, VIX is back to 80, man. All bets are off. Let me out." You just sold at the low. You just made a huge mistake.

And so that's the time that you need that powder on the sidelines so that you can look for those opportunities. Always have your buying list ready.

Sure.

Know what you want to get into. Know what you believe if the VIX hits a certain level, what's going to create value for you.

Yeah.

And be ready to buy it. So wait until it falls.

Let me ask you something else then because we hear this a lot. Amateurs typically invest with their emotions.

Not typically. Amateurs always invest with their emotions.

Heck, I see pros investing with their emotion.

That is also true. A lot of investing occurs when you're filled with emotion. It's hard not to because every decision we make, by the way, every decision. I don't mean some decisions. I mean every decision is driven by emotion.

Yeah.

Now, some people will disagree with that, but start checking yourself. Every time you make a decision, think about what you're feeling at that moment. It's always an emotion.

Yeah.

Right. You don't go to the refrigerator for the heck of it. Some emotion told you I want to get something to eat.

True.

Right. Either hungry.

Yeah.

I'm either hungry or I can't wait to get my hands on that chocolate cake again because it gave me pleasure. Right. Pleasure is an emotion.

Or some of that blueberry ice cream.

Or some of that blueberry ice cream. Man, is that good.

It is so good. Shout out to one of our clients who let us go pick blueberries out of their orchard.

Yeah. What a special weekend. That was a great time.

Awesome.

Yeah. So good.

Yeah, man.

Can you make me want some? I'm having an emotion right now. I want some blueberry ice cream.

The VIX must have spiked.

I think it did. The VIX must think the VIX is spiking. I got some emotion going on. I need to go get some ice.

That and your sugar level probably.

Yeah, for sure.

Okay. So, you said something just a second ago that I want to maybe spend a little more time on. And I've got one more chart for our viewers.

Okay.

You said that the peak and the trough were highly correlated. Well, these don't look correlated to me, but if we invert or flip the VIX, I think maybe the viewers will get a better understanding of what Phil or what you're talking about.

That's a great idea.

So, let's, it puts it in perspective. Then you can see exactly what you're talking about. But let's just take this and invert the VIX.

Oh, there you go.

Now, take this and run with it.

Yeah. So, this is literally watching the S&P 500, but you've turned the VIX to match it so that they're moving in the same direction and just look at these bottoms. These are almost perfectly correlated with these. So, these in a normal looking VIX, it would have been tall, right? Would have been going up and so you've got bottoms here. Look at this in, so much easier to tell. There's a bottom there.

Yes.

And then clearly there's a bottom there.

That's right. In 2020.

That's right.

So we're looking at the rightmost trough.

That's right. That's right. And so as that trough occurs here, you can see that by the time it occurs, this VIX has peaked in strong correlation to that trough. And then that VIX is quickly recovering and so is the market.

Yep.

And that's gen not always a V-shaped spell, but certainly again, I'll just go back to saying when the VIX is 40, 50, 60, you can bet we're going to have volatility, but you don't want to be raising cash there, that's when you want to have the cash on the sidelines ready to deploy it because those are your best opportunities.

Most investors, and these are the ranges that they ought to think about. When the VIX is trading at 15 to 20, that's a stable market. Okay? If the VIX goes above 20, anytime the VIX goes above 20, we call that time to watch closely, right? We meaning the pros, meaning the pros, we start to see anything above 20 as that, that's just a beginning of a warning signal to say things could start to get choppy here.

Okay. So, that's pay attention.

That's right. Anything above 20 and up to say 30.

Okay.

You get above 30, you're going to have a lot of fits and starts or volatile periods in the market. You've got to be aware of that. Now, if you're a long-term investor and you're just riding through it, you've got 20 years to retirement and you don't want to manage your portfolio or you don't have someone managing it for you, then just ride it. Just don't worry about it because it's not worth your time to be anxious about it. Just leave it alone because it's going to recover.

Yeah.

So, if you're that kind of investor, even when it goes above 30, don't worry about it. If you're a more active investor and you're trying to mitigate some of the risk and try to improve, you're trying to improve alpha, so to speak.

What's alpha?

Well, so alpha is just, if we're comparing it to a benchmark, the S&P 500, how much meaningful return are we getting above that benchmark? And of course, we usually adjust for risk on that, okay? But are you actually delivering enough, are you getting enough performance to say that the activity is worth it or would you be better off to just stay in the benchmark?

That makes sense.

Yeah. Okay. So, I think that if you're above 30, have some caution. Just know that things could get volatile there. You might not come out of the market, but when you start getting in those ranges, you might want to hedge a little bit. You might put a little bit of a hedge in place to be sure if things do get crazy, you've at least put some protection in place. Number one.

Okay.

But if that index starts going closer to 40, volatility is going to get worse and worse and worse. Those are not the times again to come out of the market. That's when you should already be positioned. Either hedges are in place or you've already raised some cash.

Got it?

If the market gets below 15, people always say, "Well, what about that? That must be real stable if it's below 15." And that's just the opposite. That's where complacency starts to come in.

Mhm.

So this 15, 14, 12, 10, that's real complacency. The market should not, or the VIX shouldn't be there. That's not where it traditionally trades.

Right. You said it should be between 15 and 20.

15, 20 stable.

Yep.

Right. So 10 in my opinion, that's when you need to identify that the market's probably really toppy.

Yep, there's something going on.

And it's probably complacency and that might be the ideal time to start lowering your exposure, raising a little cash, getting some powder on the sideline so that when this thing finally gives way and corrects a little bit. Now again, there's other indicators that you use in conjunction with the VIX, but you get to those really low levels, so many people start to think that is a good thing and they start buying into that.

Yep.

Because it's so low and they think, gosh, no volatility is the market's going up. Let me get in here. Well, go back to 2005 or six or seven and watch what happened. We got into those complacency sort of periods and it caught a lot of people off guard. Same thing occurred many other places when we got into that 12 range or below. That's usually not a time to be buying into the market. That's a time to be reallocating or raising cash.

Would the emotion that you would associate with that be greed?

I think it is certainly, if there's a better word than complacency, it could be greed because people get so, they get used to the market just going up, and Spell, you know this as well as any of us. The Fed has been very accommodative and so they've given us plenty,

It's true.

of dollars to push into the market.

Yeah.

To help raise these asset values. And so it's easy for people to do a couple of things. One, get complacent. Two, always expect a V recovery, V-shaped recovery, which is what we've been used to. Those things happen a lot. And that's because of government intervention. It's not just because of earnings, right?

But I believe that people do get greedy. The more used to something, they, it isn't so much greed in this case. They just get comfortable and they stop watching because it's just so good. How can it break?

Yeah.

But that VIX will tell you when things are starting to look like the market's entering a phase of complacency. That's when you should take action. Unfortunately, that's when most people are sleeping.

I guess you're right. The charts that we have here definitely don't tell a different story than what you're saying. 2008.

Yeah.

2020.

Yeah.

There's a period of complacency or VIX is, you said something to me earlier of VIX is trading or marking laterally.

That's right.

And then all of a sudden, boom.

So you're exactly right. So just look at these periods right here after 2020. Look at what happened with the VIX trading down. That's not an extreme on the VIX to the downside. That's building a little bit of complacency here, but here you start to get really, really low. It's making lower lows and this is making higher highs, right? So the S&P was rising while the VIX is coming down. That's a position of complacency forming.

Then you see that the market finally rolled over. VIX spiked a little bit. Wasn't a major rollover in the market, right? But some role occurred nonetheless. But when that VIX the next time it starts rolling down, more and more complacency and then all of a sudden we get this correction that we saw in April of this year.

Yeah. Tariff related.

But the VIX is still volatile, came down. It's back into a reasonable range and people once again are starting to feel a little bit of complacency. But here's something that's interesting, Spell. We've got the market V-shaping right now.

We do.

We're up what, the S&P 500's up 9% in just the last few weeks.

Yeah, sure is.

This thing has really moved up a lot. So it's doing well in general.

Mhm.

But why is the VIX rising with it?

Right.

If we were in this great place of stability, the VIX shouldn't be going up as the market goes up if things are stable. Yeah, I believe what we're seeing right now is a bit of a divergence with things like MACD, when you're looking at that, it's coming down while the market's going up. That's not good. And then when you look at the VIX starting to climb despite the market going up, you should see the VIX just settling, right? Not rising.

So, I think we have a lot of signals right now that are telling us we have a market that is, it's rising at maybe, in my opinion, maybe too fast. And chances are there's, might be an opportunity here to reallocate a little bit, raise some cash, and get ready to put that money back to work. I have a sneaky suspicion here that we're going to see some more volatility.

Phil, I read the Wall Street Journal every day.

Yeah, I love that about you, by the way.

It doesn't tell a different story. So, you just mentioned that the S&P 500 is up 9%. Well, on the Tuesday print of the Wall Street Journal, the article headline, "Stocks sit at record highs after wild quarter. S&P 500 has added more than 9% since Trump announced sweeping tariffs." Also on the front page, right beside that article, "West Bank settlers attack village, Israeli forces." "Russia presses its advantage in troop size as front expands."

I can't write a better script for volatility: tariffs, 9% return on the S&P 500 after the last couple of weeks, Palestinian and Israeli conflict, and of course the Russian conflict. That is plenty to create some volatility. How do you make heads or tails of any of this?

Well, one, I love that you read the Wall Street Journal.

You know, I grew up reading it and it's a staple and so I love that you read it. I think you just hit so many things, Spell, that can create volatility quick here. Here's the, for me it's looking back just even in 2025, just going back to January or around February. We said then, every analyst said, "Hey, this market looks really overdone." Yeah.

We had valuations that were way beyond where they should be, for the most part. You still had some who were eternal optimists and they believe that up and away and it never changed. Yeah. But if you think about where we were, the only thing that has changed at this point is the consumer has gotten a bit weaker. We saw the CPE print last Friday. Yep. Inflation is still hot.

Now you can look at that inflation report. This is interesting. You can look at that and say, "Oh, wait a minute, this doesn't look too bad." Well, it's because energy is down and that's the only thing big time that's making the print look okay. Otherwise, inflation is still there. Oh, yeah. It's still. And here's the other thing, Spell. Everybody talks about, oh, inflation's only at 2.3% or 2.4, whatever it is, but when we had runaway inflation over the last several years, yeah, prices increased exponentially and they never came down.

So, sure, they're rising now at a slower pace, but guess what? They're still up 20, 30, 40% from where they were just 3 or 4 years ago. If you don't think the consumer feels that, think again. Well, because it's happening. Yeah. Try going to the grocery store. Yeah.

Inflation or the rate at which prices increased over the last several years was significant. For sure. Big time. We had, we've seen in 40 years. For sure. Yeah. Absolutely. Take it back to the 80s almost. Yeah. Into the 80s even. That's right. That's right. But we had readings of CPI or inflation of almost nine. And in some cases, depending on where you looked underneath the hood, it was well into the double digits that we saw prices increase.

I think it was way above nine. That's just my opinion. I think I can dig into those reports and find there are plenty of places where it was post or better than 25%. For sure. For sure. But although price increases or the rate of change in CPI has slowed, it doesn't mean to your point that prices are falling. There's been no reduction in prices. No, they're still going up, but at a slower pace, right? They're still rising.

And in that same print, what did we see with income, right? Personal income trending the other way, right? With one exception, there was an adjustment for social security. People that didn't pay enough into their FICA over the years, they got a little adjustment, but that's an anomaly. Yeah. That's a one-time hit. And then we go right back to the reality, and that is that wages aren't really growing at the right pace to keep up with all of this.

So, if you think about that, valuations were high in February. Why are they all of a sudden okay now? And the market's higher today than it was then. So, how do we square that? Might be above my pay grade, but I can certainly tell you that I believe we have a frothy market once more. I believe there's a day of reckoning coming, and I think if you're properly positioned, you're going to have a really good opportunity to pick up a lot of good, what I'll say are discounted asset prices. I fully believe that that'll occur in the not too distant future.

Yeah, for sure. I think you're probably right. All of the signs and signals that we're watching are certainly flashing. The VIX has definitely bounced over the 20 mark that you mentioned. So, that's a warning sign and it's heading that way now. Yep. It's up to 17 today and I think we'll see it continue to go up. Yeah. Now maybe I'm wrong on that, but I believe the more stretched the market gets, and if you look at the MACD right now, it's going in a, it's going lower.

What is MACD? So MACD is moving average convergence and divergence. So you're looking at these moving averages and how they're moving. Okay. Helps us better understand the undercurrent of the market. Got it. And so if they're going up with the S&P 500, then that gives us confirmation that, okay, this is likely a sustainable rally. But when you get divergences, when you see MACD tilted lower while the S&P is tilted higher, that rarely ends well. Rarely. And I can take you back 10, 20, 30 years, 40 years, and that rarely ends well. That usually results in a retest of a recent low. I think we could see our those April lows get tested again.

Yeah, I believe that. I think the Fed lowers rates. Probably a good chance that they lower rates in September. I don't think it'll happen in July. I don't either. September's on deck, I think, or in the cards. Yeah. But I don't think that's a good thing. If that's the case, that means we really have a lot of weakening. The Fed's usually too late at every party. Probably won't be an exception this time.

Nevertheless, whether they lower rates or leave them the same, I think we have a lot of frothiness here. And there's a good chance that we'll see some corrective selling here. Yeah, for sure. And the VIX will tell us that story. Yep. Between now and then, we'll be able to detect all of that just watching the VIX. And if you're good at reading it, then you've got an upper hand here. And I think everybody should learn how to use the VIX, for sure, because it can be a great tool. But it's not a tool that should be considered the end-all be-all. You need other things to go along with it to help you confirm what's happening.

Before we give you some practical takeaways, if you've liked this video, please leave us a like, comment, subscribe to our channel. It'd mean a great deal to us. Give us an idea for a future video. We have lots of tools in our toolbox. And if you'd like to hear about how we use specific tools, let us know. We'd be happy to do a video that you would like to hear more about.

Now, Phil, practical takeaways for our listeners. I think we started today looking at the different blocks of volatility. So, low volatility, moderate, high, and extreme. In that light, or in those blocks of volatility, do you have anything to add to a listener who's, say, doing this on their own?

Yeah. So, one, understand what level the VIX is or what level it needs to be to match those ranges. So find what those ranges are, so that low volatility, know what those numbers are. Moderate volatility or extreme or anything in between, know that so that you understand what's happening when you see the VIX hit these marks. Watch the VIX. Watch it. Watch it closely. Watch it daily or weekly. When it hits these ranges, or these blocks as you say, know what your plan is.

If it goes below, say, let's say it goes below 12, then maybe your game plan is I'm going to raise 10% cash or 20% cash or whatever it is, because the market's getting complacent. Yeah, that's hard to do, because the market might be going up, but if the VIX is in that range, that is way below average. So, just know that's a range that you tend to fall into complacency. Most people would, but that's a place where you don't have to follow the crowd. Got it. Do your thing.

If that range is in the stable range, 15 to 20, know what that means. That's probably, you're not doing much of anything. You're just monitoring and leaving things alone. If it goes over 20, 20 to 30, just know that's rising. Volatility is coming. Yep. And you might see some little shocks in the market, but those might not be, that's not a high enough reading to necessarily get so much fear built into your system that it causes you to do crazy things. Just know what your plan is, though, when it gets there.

If it goes above that, know that it was much slower at one point. And if you allocate it properly, you probably have powder on the sidelines. Or be ready to change or shift your allocation. When you reach those points, take some of your bond exposure or other exposure that maybe you are willing to reduce and be ready to increase those equities. When you hit that 60 or 50, 60, 70, 80. Yep. Those are buying opportunities, have been every time, and it may not be perfect. There may be a time where that doesn't work, but chances are when you look at the preponderance of evidence, that's a buying opportunity.

Like you said at the beginning of the show, Phil, the VIX is only good if you're willing to act. That's right. You got to take action. You got to take action. Got to see the VIX. Keep up with it. Have a game plan. Just know what you're going to do every time it's in those zones. But also make sure you have other identifiers that help confirm what you're seeing. Yeah. Whether it's a MACD or whether it's Bollinger bands or whatever it might be. Pick your poison. Just know you've got a plan. Don't simply look at the VIX and say, "Okay, he said if it does this, buy." Be sure you have other things to confirm. Yeah, that gives you conviction so you can take action.

Well said. Well said. Take action with conviction. Learn about the VIX. And if you want to learn about other metrics that the pros are watching, we're here to be your guide. Yeah. You can find, they can find all of these videos in our series in the comments. You can click a link there. And there'll probably be one showing up here in a minute. So you can click on that to watch our most recent. And I think there's maybe a few more coming.

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