If you follow a traditional 60%/40% stock-bond portfolio allocation, you currently should be just 38% invested in equities — 63% of 60%. If your target equity allocation instead is 80%, you should currently be 51% invested in stocks.
These are the implications of a market timing model that keys off changes in the CBOE’s Volatility Index, or VIX VIX, -9.00% for short. The model calls for below-average exposure when the VIX is above average, as it is now: as of Feb. 23, the VIX stood at 31.02 — more than double its 14.84 low last fall.
