What do you think?
Continous VIX Contract had a low of 9.97 the 16th lowest since 1990 with a stockmarket beign pretty expensive.
What do you think?
I don’t think we can make that conclusion based on the evidence you have presented. Yes, low levels of volatility are indicative of low risk premium. However, consider that there is also a high degree of upside risk that might or might not be accounted for in equity valuations. The most volatile period in US equities in 2016, since Brexit, was following the US election in November. The S&P 500 index increased by about 5% during this period. So, if your thesis is that a surge in volatility will be accompanied by a market downturn, that might not be the case, given the nature of potential 2017 political developments.
As for the stock market being “expensive”, if you are referring to the fact that indexes are near all time highs, that is not a good basis for forming a long term market view. By definitions of “highs”, every time in the past where the stock market has reached highs, it has just proceeded to make new highs - every single time.
So, while I accept that there are risks in equities and that some indicators might point to high valuations, I don’t think what you have presented is enough to validate a good investment thesis.
people read farrrrrrr too much into VIX, probably because CNBC loves to pump it