🚨 Investor Complacency Is At Extreme Levels
The cost of hedging against a 10% drop in $SPY has fallen to its lowest point since April 2025.
This metric, the 90/110 implied volatility ratio, tells us investors are not buying protection anymore. They feel safe. And that's exactly when markets tend to surprise.
The S&P 500 is near all-time highs, adding over $10 trillion in market cap since late March. But look underneath and the picture gets uncomfortable.
VIX is sitting in the mid teens. The Shiller CAPE ratio is at 38.9, same territory as the 2000 and 2007 peaks. Only 56% of S&P 500 stocks are above their 200-day moving average while the index prints new highs. The Buffett Indicator just hit 226%.
These signals don't predict the exact crash date. But they all say the same thing.
The margin of safety is gone.
Low volatility breeds complacency. Complacency breeds leverage. Leverage breeds unwinds. Right now we have all three.
The less protection investors hold today, the more painful any selloff becomes tomorrow.
Manage your risk. This is not financial advice. 🔔
