"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, March 13, 2012

Complacency Index hits 45 month low in today's trade

I like to term the VIX or the CBOE Volatility Index, the Complacency Index, because it is an excellent gauge of whether or not traders are complacent or fearful. The higher the reading, the more fearful or worried they have become. The lower this index reads, the more complacent or careless they generally are.

One has to go back a period of 45 MONTHS (June 2007) to find investor psychology at these levels of complacency in regards to the broad stock market as indicated by the S&P 500. I should point out that this was one year prior to the credit meltdown of the summer of 2008. It would currently seem that hardly anyone on the planet is the least bit concerned about the level of the US equity markets due to the enormous amounts of Central Bank supplied liquidity.

I intend to keep posting this index at regular periods to keep an eye on this as I believe investors are growing very careless in regards to the potential for an apple cart upsetting event.

Something about this just does not "feel" right to me. While one cannot argue with the tape, or in this case, the charts, the fact that all of the woes tied to the enormous amounts of indebtedness in the West have essentially been papered over, is extremely disconcerting.


  1. We're in reflate party mode. There is a perception of no risk. Everybody is levering up and going all in. Eventually reflate will fail, but for now it's still working. Enjoy the easy money high while it lasts.

  2. “In search of excellence”
    Thank you Mr Smith for this article written by you in the New York Times:
    There is only one way Home, and that includes moral integrity.

  3. It is very interesting that Americans have been redeeming their equity mutual funds since late 2008, but obviously there are still some left chasing the Impossible Dream of Easy Money. If investing was so easy as buying an S&P 500 index fund and going on permanent vacation, then how come this index has gone nowhere over the last 12 years. May make it to 1550 old high on this Bernanke Largess move, but looks a lot like 1987 and 1999 to me. Can stocks grow at more than the rate of GDP for decades? The last decade says not, and stocks were even grossly overvalued in 1995, recent history proves this face. Sage of Wexford.

  4. Man overboard
    After reading about all the bids under 1680 for London gold, I guess they just pulled their bids? I would have done the same (except that I usually buy at the market). But why chase things that are falling like manna and quails from heaven? They just threw golden boy overboard, so the bottom feeders can now nibble away until he’s gone. And then in time the growing army will get hungry again.
    And it seems that the article in the NY Times has hit a chord. Can you imagine - MSM is beginning to smell something disagreeable? Can it be that they are softening to the idea that Kosher is Kosher? Who do you believe now Sprott Money selling a Maple Leaf at 1718.05 or Kitco’s price for an ounce of gold at 1646.90? Is this a Tale of Two Cities?


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