VIX may not mean-revert down for years, just like 1996-2003
My guess is that VIX won't come down meaningfully for a few years, just like it didn't from 1996-2003.
- Retail speculative fever only seen before in the late 1920's and the late 1990's.
- New SPAC's every week.
- A small EV manufacturer worth more than all other automakers combined.
- Far more options traded than ever before.
- Yields remaining near all time lows.
- Valuations at all time highs.
- Fed balance sheet at all time highs.
- Fiscal spending like never before.
We've had situations somewhat like this before - the 1920's, the Nifty Fifty, the dot-com bubble.
But we've never had situations like this with such a weak underlying economy, or with so much economic uncertainty. We're in uncharted waters.
Nevertheless, this is the closest analog I can come up with to the current volatility regime.
- Retail speculative fever only seen before in the late 1920's and the late 1990's.
- New SPAC's every week.
- A small EV manufacturer worth more than all other automakers combined.
- Far more options traded than ever before.
- Yields remaining near all time lows.
- Valuations at all time highs.
- Fed balance sheet at all time highs.
- Fiscal spending like never before.
We've had situations somewhat like this before - the 1920's, the Nifty Fifty, the dot-com bubble.
But we've never had situations like this with such a weak underlying economy, or with so much economic uncertainty. We're in uncharted waters.
Nevertheless, this is the closest analog I can come up with to the current volatility regime.