VIX as we know is the much quoted index of stock market volatility. It’s been getting a lot of air-play of late. It’s supposed to give us a heads up on market conditions and volatility.
Vicks is a widely known nasal decongestant, vapor rub etc. that’s been around for years.
Which is more useful?
VIX has a huge profile in the investment world. For many it fulfills a “canary in a coal mine” role to indicate when risk is on the rise and dictate what asset allocations might make more sense. There are even some ETFs which directly play on how VIX performs. Some folks regard volatility as an asset class in itself.
So you’d think the VIX index would be a useful thing.
It’s been quiet for years and then one day last week it pops up by about 130%! Was it useful? Certainly not in predicting the surge in volatility. Did it fulfill its “canary” role? Well to be honest there was an entire flock of canaries alerting us to the fact that vol had risen. The Wall Street Journal managed to get the words plunge,panic, rout, shatter anf jolt all into the one paragraph so I kinda got the higher volatility message.
I honestly think it’s good as a coincident indicator and a short hand for demonstrating market stress…….but that’s about it.
As for Vicks, it does what it says on the jar or inhaler but does seem to have a whole battery of uses. Some feel it has around 20 separate functions. A few of them are:
- make up artists use it if actors need to cry
- it can help to repel mosquitoes
- foot-ball players can use to help breathing (saw it being rubbed on Oliver Giroud’s chest but didn’t do much good!)
- gets rid of nail fungus
- stops cats from scratching hard surfaces
- helps paper cuts
- etc.
So, it’s pretty clear to me that Vicks wins out.
So next time the markets get shaky, grab a jar of Vicks and breathe easy.
(Views as usual are personal)
Tradewinds 