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In my 17 years of investing, I've yet to dabble with options, ETNs, and other products. I've been reading a bit about the pros and cons VIX investing/betting/hedging and I was wondering what you all think.
The VIX is at a near low.
Future options are higher in August
Trade volume looks low
The Fed might raise rates
We're in a polarizing election year
The S&P is looking better technically on low volume
I've been putting more money to work in my IRA/Roth IRA and HSA over the last few days. I'm still not confident I understand the VIX and I'm trying to find an instance where the VIX and S&P have a positive correlation; so far it seems the VIX increases and the market dives 80% of the time…sometimes the market dives and the VIX stays flat.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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It's INSURANCE.
I sometimes use insurance (VIX, covered calls) but most of the time it's a loss of premium.
Currently, very little exposure to the Market (<5% overall). Discretionary retirement funds, almost entirely in cash.
66/69. More than enough retirement funds.
the problem is it is market timing to the nth degree . you have to be right and sell it or you threw money away .
so far if you bought it and held it through these volatile times you would have lost money to date .
unless that was a short term speculative bet i think it is a bad idea if you are still in your accumulation stage .
all these hedges and even bonds give you temporary relief from usually a short lived temporary problem andend up permanently reducing your long term gains
Well, I didn't buy into the VIX but it's up about 23% in just a week (most of which was due to Friday's action). While I missed the opportunity, I'm going to wait on the sidelines before I commit any more cash to long positions. I have a lot to read and research about the VIX before I try to invest with it.
Don't just look at one instance. Decide what your buy /sell criteria are going to be, then back test your strategy over at least 10 years. If it works great, if not you've saved yourself some money. In my experience, most of the time you'll save yourself some money.
The S&P is looking better technically on low volume
I am sure those are all valid assessments. But no doubt the 10,000 other professional investors out there are thinking the same thing, and perhaps have more bullet points. Investing in the VIX is gambling, as in, I win and you lose. So what makes you think you will be smarter than all those other guys?
Very very few people get rich on investing. Very few even beat the market. A lot of people do OK. Are you feeling lucky?
I am sure those are all valid assessments. But no doubt the 10,000 other professional investors out there are thinking the same thing, and perhaps have more bullet points. Investing in the VIX is gambling, as in, I win and you lose. So what makes you think you will be smarter than all those other guys?
Very very few people get rich on investing. Very few even beat the market. A lot of people do OK. Are you feeling lucky?
Lots of people, and lots of regulars on this Forum, are evidently convinced that the stock market overall is "gambling". That being so, the implication is that one flavor of gambling might be wise, to leaven or counterbalance other flavors of gambling. There is then a frenetic search for the "best" flavor of gambling, or how several could be combined.
If however we regard committed holding of long-positions, and especially of diversified long-positions, as investment instead of gambling, then the playing of all sorts of clever tricks becomes a form of entertainment or idle dabbling, and not a fundamental means of growing our money.
Buying or selling the VIX is wise for professional gamblers. There are indeed such people, and some of them are remarkably successful. There are successful gamblers in the stock market, in horse-racing, in real-estate, in baseball, in card-play. I sincerely wish them all (including the house) the best of luck. For the rest of us, the tantalizing prospect of clever bets remains an idle fancy.
Lots of people, and lots of regulars on this Forum, are evidently convinced that the stock market overall is "gambling".
Perhaps you are not aware that the VIX is not a stock and it has no intrinsic value. Compare that to buying stock in a company which does have intrinsic value. People invest in companies because they believe in the company. The VIX is not a company, it is something that is more akin to a coin toss. People invest in companies and they gamble on coin tosses. Anyway, good luck with that.
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