- As tech stocks march to new all-time highs amid rising COVID-19 cases in the US, investors are questioning whether a speculative bubble in stocks may be forming.
- Nicholas Colas, co-founder of DataTrek Research, said on Tuesday that investors can look at the level of the VIX, also known as the fear index, to determine if stocks are in a speculative bubble.
- Colas highlighted that near the peak of the the dot-com bubble, the VIX had an average reading of 24.95, relative to its since-inception average reading of 19.8, according to historical data.
- Colas said as long as the VIX trends lower to below the 20 level, the stock market is not in a bubble.
- The VIX registered a reading of 24.46 on Tuesday, falling 70% from its peak of 80.85 in mid-March.
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As mega-cap tech continues to command an ever-growing share of the S&P 500's total market value, and as the Nasdaq 100 index hits new highs amid rising COVID-19 cases in the US, investors are wondering if a speculative bubble in stocks is forming.
Nicholas Colas, co-founder of DataTrek Research, said in a note on Tuesday that investors can look to the VIX, also known as the fear index, to identify whether stocks are in a bubble or not.
See the rest of the story at Business Insider
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See Also:
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- A high-growth fund manager returning 7 times more than his peers tells us how he's shifting from post-pandemic tech themes into 'real companies' — and shares 6 stock picks set to win the market's next phase
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