Our newsletter is up for the week, and this time around, we’re discussing the VIX. We ended one of our blog posts last week asking where does volatility go from here? That is the million dollar question. Are we at mid 07, about to see 18 more months of high volatility; or are we at the end of 08, where volatility is about to drop drastically?

If the volatility of last week was just the tip of the iceberg and a trigger for increased volatility across markets – then traditional, long volatility, managed futures programs are where you want to be. But if the volatility spike was just that – a spike – and we fall back down to normal levels of volatility across markets – then a short volatility program may be better suited for medium term success moving forward.

We all know managed futures crisis period performance, but are we at the beginning of the crisis, or the end? There were a lot of people who got into managed futures at the end of the first credit crisis (around December 2008) who were left with losses and a bitter taste in their mouth after a down year for managed futures in 2009. Conversely, those who seized upon the first signs of a crisis in early 2007 (remember China being down 5% or so over MLK weekend), were well rewarded through the rest of 2007 and 2008.

So, where are we? Is this volatility spike like early 2007 or late 2008 ?

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