When you hear the term “volatile,” you normally associate it with something bad. But TheStreet Pro‘s Bob Lang explains why a volatile market is a two-way street. He explains why “it’s only a bad thing when people start selling into the down move.”
Transcript:Â
Bob Lang:Â Volatility is just basically the market’s reaction to the uncertainty that’s out there into the future right. And the VIX is the way we capture that. We look at volatility in terms of of the of the VIX Futures term structure and the cash. And what it’s trying to do is capture the volatility that can be in the markets over the next 30 days 60 days 90 days. So that being said, you know, if there’s a lot of uncertainty out here and frankly, you know, you know, you tell me. I mean, when we go to when we close the markets on Friday, are we worried that on Saturday or Sunday there’s going to be some news about tariffs? Well, you know, the last couple of weeks that’s been the case. So now we have something more to worry about. And the more things we have to worry about Conway, about the uncertainty, the more that volatility is going to start to rise. Now remember volatility is is a two way street here. It’s not a bad thing. It’s only a bad thing when people start selling into the down move. All volatility is is that the market’s going to move like this. If it’s moving normally like this it’s going to higher volatility. It’s going to move like this. It means that there’s going to be bigger down days. But there’s also going to be bigger up days. But you know as an investor I feel 6 to 10 times worse when the market is going down a lot than it is when the market’s going up a lot. So that’s going to cause me and a lot of other investors to go ahead and sell and fire my stocks before I have a chance to lose any more money. And usually that’s the wrong way to go. Wrong wrong approach. Right because when volatility is starting to spike we want to be selling volatility. We want to be getting along the markets. You know when people are throwing the baby out with the bathwater they want to get in there and start. They should be getting in there and start buying stocks. But you know at this point in time with volatility, it’s actually a fairly muted Conway. It’s a 15.5 right now. You know which you think that you know it’s expecting the market is expecting about a 1% move in the markets over the next 30 days. And that’s relatively normal a little bit less than normal than we than we normally have.
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Conway Gittens:Â So as you keep a close eye on the VIX, how can the average investor use volatility during Trump 2.0.
Bob Lang:Â Well I think you know big spikes in volatility when we get them when we got them in late in January. Our good opportunities to to jump in there and start buying stocks. I think you have to to hold your nose and dismiss all of the things that are all the distractions that are coming around you. You know, things like, you know, tariffs or any other attacks or talking about the gulf of America or, you know, we’re going to pick up gaza. All these little silly things that are going on that we have no control over. If they’re affecting things in the markets, then we can take advantage of that opportunity, especially when the markets come down on a big spike in volatility. And I think those are the chances that we have to to jump in there. I mean, when you talk names like like meta recently got hammered on some news that really was unrelated to them. There was an opportunity for you to pick up some of that, some of that stock. And now it’s at at or near all time highs.
Conway Gittens:Â So in trader speak we’re here at the new York stock exchange. You’re telling people buy the dip. Buy the dip.
Bob Lang:Â Yeah yeah. Buy the dip.
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