CITI: If You Think The ‘Fear Index’ Is Telling You To Buy Stocks, Then You Are Wrong
Global financial markets got rocked this week after Federal Reserve Chairman Ben Bernanke suggested that he could begin to taper, or gradual reduce, the Fed’s stimulative quantitative easing program.
Among other things, the CBOE volatility index — aka the VIX, aka the “fear index” — spiked above the 20 level for the first time in months.
For the contrarians, a high level of fear in the stock markets suggests that it’s time to buy.
But not so fast, says Citi’s Tobias Levkovich.