Ratio SPX/VIX for portfolio management
Observing the ratio SPX/VIX over time one may notice areas (or zones) where buying is optimal, whereas other regions are suitable for mild to strong portfolio restructuring. In 2000 the warning by this ratio was rather brief, whereas plenty of advance signals were provided in 2007. Examining now the current period, we observe that the all time peak of 192.7 occured in July last year and in spite of the following short drawdown towards 80s-90s (buying opportunity), ratio values are presently approaching the critical numbers of 175-190. It is my opinion, based on the above evidence that stock percentage in portfolios should remain at a minimum.
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