Beware Betting on Volatility

Volatility is back, but that doesn’t necessarily mean that it is time to buy.

That’s according to the WSJ‘s Jason Zweig in his column Hazardous Waters: Should Investors Bet on Rising Risk?.

Turns out that the iPath S&P 500 VIX Mid-Term Futures (VXZ) was one of the fastest growing exchange traded products in June.  However, Zweig warns that rising volatility is a poor forecaster of future returns.

He suggests that if you want to capitalize on volatility, wait until markets are calm, not stormy, and the prices of the various VIX products come down.

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