Is President Trump making volatility higher again? It sure looks that way to me – and that has important implications for investors and traders!
Consider the CBOE Volatility Index, or VIX. The MoneyShow Chart of the Week shows how it traded did during January 2025…
VIX - January 2025
All told, the VIX’s average close was 16.76. Its highest close was 19.54. And its highest intraday peak was 22.51.
Now, let’s look at how the VIX traded in January 2024...
VIX - January 2024
That month, the VIX’s average close was 13.39. Its highest close was 14.79. And its highest intraday spike was 15.4.
The verdict: No matter how you slice it, volatility was HIGHER last month than in the same month a year earlier.
Yes, the level of the VIX depends on a LOT of different factors at any given time. That will always be the case. But my point – especially after last Thursday and Friday, when divergent and frequent headlines about tariffs from Trump and some of his surrogates caused stocks to both sink and soar – is that Trump is a volatility-ENHANCING element for the markets.
His policymaking approach, his style, the timing of his comments, and the venues he chooses to communicate are different than for any other president in modern history. That forces investors and traders to be alert for potential market “swans” of all colors.
So, I’ll share my thesis again: All else being equal, volatility (and the VIX) will likely be higher in Trump 2.0. Keep that in mind when trading instruments like options, where current and future volatility levels are a big part of trade evaluation. You may also want to take that into account when deciding whether to hedge against risk, how much of your portfolio to hedge against risk, and so on.