Yesterday evening my buddy called me: "Everything's green, everything's running — time to take more risk?" I told him: Wait. I know that feeling. I was exactly there in 2000.
The Calm Before the Storm
The VIX — the market's fear gauge — stands at 17 today. That's the lowest level since mid-April. And that's exactly what makes professionals nervous. Because historically, the same thing always happens: When fear disappears, it comes back with double the force.
Look at the numbers: In April, the VIX was at 16. Two weeks later: 8% crash in the S&P 500. In October 2021: VIX at 15. One month later: 10% correction. The market works like a pendulum — when everyone's relaxed, tension builds in the background.
What This Means for Your Money
If you have 10,000 euros in the DAX or S&P today and fear is this low, it doesn't mean "sell everything". But it means: check your strategy. Do you have an emergency fund? Do you have positions you can hold even with -20% drawdown? Or are you like my buddy, who panics at every 5% drop?
Professionals are doing two things now: They're securing their gains (buying puts, insurance against losses) and they're keeping cash on the sidelines. They're not saying "the market falls tomorrow". They're saying: "If it falls, I'm prepared."
How Pros Are Reacting
What I'm seeing now: Institutional investors are buying protection massively. The put/call ratio — the ratio of bets on falling vs. rising prices — has risen from 0.65 to 0.82 in the last two weeks. That means: The big players aren't betting on a fall. But they're hedging.
In other words: They're not playing against the market. They're playing against complacency. And that's exactly what you should do too.
First Steps for Beginners
If you're just starting: The VIX is your early warning system. If it's below 15, the market is too relaxed. If it's above 25, there's panic. Both extremes are short-term opportunities — but only if you have a plan.
My plan? I hold my boring ETF portfolio. I have my emergency fund. And I know: If the VIX jumps to 25 tomorrow, I don't sell. I breathe, read my old notes from 2020, and remember: Panic is an opportunity. But only for those who are prepared.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.