markets

Should Traders Worry If Volatility Rises? Not Necessarily

BlackRock Strategist Sees Strong U.S. Economic Momentum

While many market watchers warn record equity calm won’t last, one says its end may not spell doom for investors. Birinyi Associates’s Jeff Rubin highlighted in a note on Monday that rising volatility in the 1990s was not a negative for the market, so a VIX rebound is no reason to fret.

Annual S&P 500 Index moves in the past three decades show higher VIX levels were no barrier to a rally in stocks. Since 1990, there were nine years when the equity gauge climbed more than 15 percent. In six of them, the CBOE Volatility Index was above its current historical median of about 17.6.

That said, periods of declines have also come hand-in-hand with higher volatility: In each of the five years when S&P 500 losses exceeded 5 percent, the VIX was above its median. 

Take a look at the data:

Year
Average VIX LevelS&P 500 Move (%)
201711.410.3
201615.89.5
201516.7-0.7
201414.211.4
201314.229.6
201217.813.4
201124.20.0
201022.512.8
200931.523.5
200832.7-38.5
200717.53.5
200612.813.6
200512.83.0
200415.59.0
200322.026.4
200227.3-23.4
200125.7-13.0
200023.3-10.1
199924.419.5
199825.626.7
199722.431.0
199616.420.3
199512.434.1
199413.9-1.5
199312.77.1
199215.54.5
199118.426.3
199023.1-6.6
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