When will equities bottom? Here is one approach to take
|Answering the unanswerable
Ok, no-one knows when the equity market will bottom, but it is worth doing a quick comparison to the 2008-2009 financial crisis to look for clues. One place to look at is the Volatility Index.
What is the VIX?
According to Investopedia:
Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors' sentiments. It is also known by other names like "Fear Gauge" or "Fear Index." Investors, research analysts and portfolio managers look to VIX values as a way to measure market risk, fear and stress before they take investment decisions.
The "fear index' is helpful to look at, because it is often when people feel less fearful that they step back into the equity market.
Look at the SP500
Look at the FTSE 100
Look at the Nikkei
So, in answering the question, 'when have stocks bottomed', remember the VIX. It may very well provide the guidance for when a bottom in the equity market is finally in and when a sensible time to buy is.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.