The Markets Are Speaking Up Via The $VIX...I Am Listening Closely

I try not to get excited about the markets until the $VIX spikes to 20 or above.

Above 30 and I am locked down thinking about buying my favorite growth companies/ETF’s. Once or twice a year we get a spike above 20…and in March 2020 we spiked to 90 with the COVID panic (I started Panic With Friends because I believed it was a historic opportunity to NOT panic).

Today the $VIX spiked past 18 (courtesy Koyfin.com)

This tells me the headlines will start getting even spicier which means I will try to read even less.

Let’s be honest…the headlines, the internet bullying, bullshit and stupidity can’t get much worse. Beneath the bullshit, there is truly some bad news and bad behavior going on out there right now. You do not need me to recap.

Prices are how I recap the news. Less drama, more truth.

I am surprised it took the $VIX this long to spike considering the last few weeks but here we are.

I mostly index and if you follow our ‘Trends With Friends’ show you know what stocks I own and like. Last weeks show was really good in that we were calling it a ‘shitshow for the bears’ but also knowing that it was not a great time to buy stocks partly because we were making bear jokes and partly because so many stocks had such great runs and as JC pointed out in the show through the aggregate sentiment data that he studies that people were way too bullish.

Here is the whole show but the specific chart was in minute 29-35:

The good news…

Despite the spike in the $VIX there is a lot of strength in the market as money is rotating, not leaving. JC and I have been explaining this on the show for months and our pal Charlie is calling it the ‘great rotation’.

I can’t tell you what happens next, but I have a plan. I love doing the work each week on ‘Momentum Monday’ and ‘Trends With Friends’ to be ready for these bigger market moments of fear and dislocation.

I wish I was 20 and knew what I knew today.

I know I would have stayed invested and I know I would have added to my stock market holdings when the $VIX spiked above 20 and 30 and hopefully 40 (please not 90 again)!

I guess the ultimate question is ‘if I am going to stay invested for 30 years, whats the lowest cost smartest way to stay invested and what do I buy when the $VIX crosses 20 and 30 and 40’?

I have been a $QQQ over $SPY guy as you know if you read here.

But let’s at least go back and torture me/ourselves a bit.

In the last 10 years my $QQQ over $SPY has been wonderful, but I would be sitting much prettier If I had been $SMH over $QQQ and $SPY.

I have no excuse because I am great pals with Jan Van Eck the CEO of Van Eck which manages the $25 billion Semiconductor ETF ($SMH) and I probably asked him about it when he came on Panic With Friends back in November 2022 which was literally the moment before Open AI exploded along with semiconductors like $NVDA.

I know a lot more about semiconductors in 2024 than I knew in 2022 and I own some $SMH. It is also why I asked Michael Parekh to be a regular on Trends With Friends which he has been the last month. Michael knows semiconductors. As the head of Goldman’s internet research in the 1990’s, he took a lot of these companies public. He has also been early in the AI and chip investing trend and was buying NVIDIA way back. It has been fun to pick his brain and intend to do a better job the next time the $VIX spikes to 30 and people are running from technology stocks.

Hope this helps.

PS - If you are itching to buy the Semiconductor ETF or some indexes tomorrow after reading this try out FREC.com which partnered with Van Eck to launch a direct index version of $SMH which is even more tax efficient and the same cost (I am a customer and we are investors).