Just when you thought it was safe to stop day-trading

A female sharemarket analyst with red hair and wearing glasses looks at her computer screen watching share price movements.

A female sharemarket analyst with red hair and wearing glasses looks at her computer screen watching share price movements.

Me, 15 minutes ago: “What will I write about today?”


(That’s the sound of the news fairy arriving, just in time to solve my conundrum.)

It was in the form of an update on the Fin Review’s Markets Live live blog.

And it was right up my alley.

See, apparently the good people at the Chicago Board of Exchange (that’s CBOE, to the cool kids) have released another ‘fear index’.

There’s already one, called the ‘VIX’ which gets CBOE lots and lots of free headlines.

I’m sure you’ve heard of it.

But that’s not enough.

See the VIX measures volatility (not really ‘fear’, but that four letter word gets all the headlines) over an extraordinarily long period.


That’s just way too long.

What if you could create headlines (sorry, ‘accurately report on volatility’) during a single market day?

I’m with you… I don’t know how Warren Buffett has managed thus far, either!!!

Now, just in case my attempt at humour is lost on you (it’s not new, ask my wife), let me come clean.

Clearly, I’m kidding.

You know that quote, ‘not everything that can be counted, counts, and not everything that counts, can be counted’?

Yeah, that wasn’t written about these indices… but it could have been.

A new ‘fear index’ is great for CBOE’s branding.

It’s great for the poor journos with huge workloads and oppressive headlines.

But… not for much else.

Still, as I said, the AFR is reporting today that there’s a new index to compete for our attention:

“CBOE Global Markets, the Chicago-based exchange operator behind the VIX, has announced that a new one-day version of its flagship volatility index is poised to launch.

“The CBOE 1-Day Volatility Index (ticker VIX1D) is scheduled to start Monday, according to a notice on CBOE’s website.

“If it succeeds in capturing the sentiment embedded in 0DTE (zero days to expiration) options, it could mark a significant moment for investors and traders across the spectrum.”

Again, let me say in my most sarcastic voice: “Thank God… what on Earth have I been doing without such an index to guide my investing?”

Then, without sarcasm, let me suggest to you that Warren Buffett has, since 1965, spent something like 14,500 market days investing without it.

And… he’s done pretty well.

But it’s not just Buffett, either. The market itself has done very nicely over the same time frame.

Of course, if you make money from other people trading (if you’re an exchange or a stock broker, for example), you’re genuinely excited about this.

After all, it’s going to give some people yet another reason to trade.

But if you’re an investor… I hope you yawned and moved on.

Because, truly, measures of volatility (over an hour, a day, a week or even a year) have nothing for you.

But they are, of course, constant temptations.

If everyone is talking about them…. Maybe there’s something to them?

Maybe I should be more ‘sophisticated’?

More ‘clever’?

More ‘active’?

And you know what? Those are exactly the questions those vested interests want you to ask yourself.

Because if they can convince you to abandon sensible, long-term investing… well, then you become a meal ticket.

But it probably won’t help your results.

In fact, it’ll probably hurt your results, I reckon.

Because if you’re going to compete with highly paid traders, with supercomputers and even faster internet connections…. you’re starting off with both hands tied behind your back.

I mean hey, it’s a free world. You’re welcome to give it a go, if you don’t like money!

And I guess the law of averages mean at least one person will do well.



I couldn’t care less about the VIX. Or the new VIX-with-a-poor-attention-span.

It has nothing to tell me. Nothing to help me with.

And can only be a distraction from the main game – finding great businesses and paying good prices.

Investing regularly.

And letting time do the rest.

Wondering where the excitement is? The action? The cafe-by-the-beach day-trading?

Yeah, it doesn’t exist. At least not in my world. And I hope not in yours, either.

I’m kinda keen to get rich slowly, rather than going broke, fast.

Or you can tell me again about how Buffett’s past it, and long term compounding is dead.

And I’ll introduce you to a bloke named Aesop and his tortoise and hare.

And remind you that not everything that can be counted, counts.

Fool on!

The post Just when you thought it was safe to stop day-trading appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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