We are in the midst of an incredibly rare market phenomenon that you absolutely need to be aware of. While most investors are quaking in their boots, worried that the current eerie calm in the markets is a sign of impending doom… the data tells a very different story. One that could lead to double-digit gains in your portfolio over the next year if you make the right moves now.
I’m talking about the rock-bottom reading we just saw on the VIX, Wall Street’s so-called “fear gauge”. As Brett Eversole reports in his latest article, “Stocks Can Keep Rising Despite a Low in Fear”, the VIX just hit its lowest level in over 4 years:
“The VIX fell to less than 12 last month. We’ve only seen that level a handful of times since 1990, when the data begins.”
Now, conventional wisdom says that periods of extreme market calm like this are often the proverbial “calm before the storm”. The last time the VIX was this low was right before the pandemic rocked the markets in early 2020. So it’s natural to be nervous that history might repeat itself.
But as Brett points out, the data tells a very different story:
“The S&P 500 Index has returned 8.7% annually since 1990. That’s already impressive. But buying in low-volatility environments can improve those returns…
Similar setups led to 2.9% gains in six months and 10.6% gains over a year. That means a slight slowdown is possible over the next few months… But over the next year, we can expect significant outperformance – and double-digit gains.”
You read that right, based on historical data, stocks have been higher a whopping 86% of the time in the year following a VIX reading this low. With an average gain of 10.6%! That’s the kind of asymmetric risk/reward setup that can really juice your returns.
So while others are paralyzed by fear, now is the time for intelligent investors like us to be greedy. To have the conviction to stay invested and potentially even add to our positions, knowing that the odds are strongly in our favor.
As Brett sums it up:
“This low-volatility environment won’t doom the bull market. Outperformance is likely over the next year… And that’s why we want to keep owning stocks.”
Brett Eversole
I couldn’t agree more. So don’t let this rare moment of market serenity pass you by. Stay long, stay strong, and get ready to reap the rewards. Your future, wealthier self will thank you.
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