DoubleLine Capital’s Jeffrey Gundlach said that low-volatility markets won’t continue for long in a webcast last week. But those who took that as a cue to place a bet on volatility were definitely not rewarded.
Both the iPath S&P 500 VIX Short-Term Futures ETN (VXX) and the ProShares VIX Short-Term Futures ETF (VIXY) dipped 1% each in the past week while the S&P 500 fell 0.06% in the same period. That’s not a knock on Gundlach. No one can predict when exactly volatility will strike and at what magnitude.
Leo Chen, a portfolio manager and quantitative strategist at Cumberland Advisors, thinks the VIX as well as other market indicators has given in to Goodhart’s Law,
Read the full article here: http://www.barrons.com/articles/the-vix-is-not-a-fortune-teller-1498144374