http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era End of the Easy Money Era The VIX fear index hit its 11th highest level ever as investors come to believe that the Fed has signaled the end of the easy money era. Is this an overreaction or should you be selling stocks right and left? Investor Place comments on how the VIX just misses the top ten most volatile days in a quarter of a century. The CBOE Volatility Index (VIX), or fear gauge, soared ahead 39.9% on in Friday trading, making it the 11th greatest move in the index in more than 25 years. Wall Street simply got spooked by worries that the end of the easy-money era is over. But let’s get real-a 25 basis point or even 50 basis point increase in the fed funds rate is hardly going to torch the bond markets and, in fact, would show the Fed’s greater confidence in the U.S. economy’s ability to both weather higher rates and continue to expand. Despite a 2.1% decline in the Dow and a 2.5% drop for the S&P 500, both indices are less than 3% below the all-time highs set in mid-August. Their opinion is that the current worry about a small increase in interest rates is much ado about too little. To understand how a small rate increase might signal the end of the easy money era let’s start with the VIX. The VIX Fear Index According to Investopedia VIX is the ticker symbol for the CBOE volatility index.

1. End of the Easy Money Era
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
The VIX fear index hit its 11th
highest level ever as investors
come to believe that the Fed has
signaled the end of the easy
money era.

3. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Is this an overreaction or should
you be selling stocks right and
left?

4. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
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5. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Investor Place comments on how
the VIX just misses the top ten
most volatile days in a quarter of
a century.

6. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
The CBOE Volatility Index (VIX),
or fear gauge, soared ahead
39.9% on in Friday trading,
making it the 11th greatest move
in the index in more than 25
years.

7. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Wall Street simply got spooked
by worries that the end of the
easy-money era is over.

8. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
But let’s get real-a 25 basis point
or even 50 basis point increase in
the fed funds rate is hardly going
to torch the bond markets and, in
fact, would show the Fed’s
greater confidence in the U.S.
economy’s ability to both weather
higher rates and continue to
expand.

9. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Despite a 2.1% decline in the
Dow and a 2.5% drop for the S&P
500, both indices are less than
3% below the all-time highs set in
mid-August.

10. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Their opinion is that the current
worry about a small increase in
interest rates is much ado about
too little.

11. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
To understand how a small rate
increase might signal the end of
the easy money era let’s start
with the VIX.

12. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
The VIX Fear Index

13. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
According to Investopedia VIX is
the ticker symbol for the CBOE
volatility index.

14. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era

15. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
VIX is the ticker symbol for the
Chicago Board Options
Exchange (CBOE) Volatility
Index, which shows the market’s
expectation of 30-day volatility.

16. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
It is constructed using the implied
volatilities of a wide range of S&P
500 index options.

17. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
This volatility is meant to be
forward looking, is calculated
from both calls and puts, and is a
widely used measure of market
risk, often referred to as the
“investor fear gauge.”

18. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
VIX values greater than 30 are
generally associated with a large
amount of volatility as a result of
investor fear or uncertainty, while
values below 20 generally
correspond to less stressful, even
complacent, times in the markets.

19. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
A VIX of 39.9% is certainly in the
fear and uncertainty range.

20. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Should it be? Is the market at
such risk?

21. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Normally that might not be the
case but when stocks are
generally overpriced it could be
time for a correction.

22. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Are Safe Stocks Really
Safe?

23. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
The Wall Street
Journal reports fear for the
safest investments as the
market stutters.

24. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Investors who spent the summer
floating serenely on mirror-calm
markets have been frantically
bailing out the boat in the past
two days.

25. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Whether the storm that hit U.S.
stocks on Friday and spread
globally on Monday is the start of
something much worse or merely
a squall depends a lot on what
explains it:

26. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
the Federal Reserve, global
central banks or the unwinding of
excessive complacency.

27. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Unfortunately for shareholders,
the signs point to the latter.

28. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
In a normally priced market and
with more normal interest rates it
would not be a huge deal to see
an increase of a quarter percent
or so in the Federal Funds rate.

29. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
The problem is that rates have
been historically so for 8 years
and the market has come to
assume they will remain so.

30. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
Overpriced stocks, especially
dividend stocks that will get hurt
with higher rates may be in for a
big correction.

31. http://profitableinvestingtips.com/profitable-investing-tips/end-of-the-easy-money-era
This pending end of the easy
money era is seen in the abrupt
rise of the VIX fear index.