VIX Surges 50% In November: History Shows Patient Investor Win Big After Panic

Market volatility made a sharp comeback Thursday, with the CBOE Volatility Index – commonly called the VIX or Wall Street's fear gauge – closing 11.4% higher to 26.3 levels, as concerns around overheated tech valuations and uncertain monetary policy rattled investor sentiment.

The VIX has jumped 50% so far in November, setting the stage for what could be only the 11th month in history in which the volatility index surged by more than 50%.

Prior spikes of this magnitude occurred during moments of heightened market distress, including:

• April 2022: 62.4%
• Nov. 2021: 67.2%
• Feb. 2020: 112.9%
• Oct. 2018: 75.17%
• Aug. 2015: 134.2%
• July 2011: 52.9%
• Oct. 2008: 52%
• Sept. 2008: 90.75%
• Aug. 1998: 78.6%
• Oct. 1997: 53.2%

History of Extreme Fear: VIX Monthly Spikes Above 50%

What Is The VIX?

The VIX, compiled by the Chicago Board Options Exchange, measures the market’s expectation of 30-day volatility based on S&P 500 index options.

It tends to spike during periods of market stress and decline during calm, bullish periods.

A reading above 20 often signals heightened investor anxiety.

Why Did The VIX Soared in November?

The November spike in volatility is being fueled by a combination of technical, macroeconomic and psychological drivers:

1. Overextended Rally in Equities: The S&P 500 – as tracked by Vanguard S&P 500 ETF (NYSE:VOO) – had rallied in each of the previous six months, surging 42% from its tariff-driven April low to its late October high. The rally was powered by AI-fueled enthusiasm and two consecutive interest rate cuts by the Federal Reserve in September and October.
2. Tech Valuation Fears: Wall Street is voicing growing concern over stretched valuations, particularly among U.S. tech giants. Several firms now trade at price-to-earnings multiples last seen during the early 2000s dot-com bubble. Not even the blockbuster earnings from Nvidia Corp. (NASDAQ:NVDA), which beat expectations and raised guidance, could stem the spike in volatility.
3. CAPEX Over Dividends: Investors are reassessing future shareholder returns as members of the so-called Magnificent Seven shift toward aggressive capital expenditure rather than dividends or buybacks.
4. Uncertainty on Rates: The Federal Reserve has signaled a pause in its rate-cutting cycle, citing still-elevated inflation risks and not-so-worrisome economic data. Fed Chair Jerome Powell's recent statements suggested caution as the full effects of past rate cuts work their way through the economy.
5. Mixed Labor Market Signals: A six-week delayed September jobs report due to the shutdown added to the confusion. The U.S. economy added 119,000 nonfarm payrolls, more than double Wall Street’s 50,000 estimate. Yet, the unemployment rate rose unexpectedly from 4.3% to 4.4%, the highest since October 2021 – indicating a bifurcated labor market.

What Happens To The Market After VIX Spikes Like This?

While short-term volatility shocks tend to rattle markets and shake investor confidence, history shows that those who remain patient through fear-driven selloffs are often rewarded handsomely over the medium and long term.

Benzinga analysis shows that in the 10 prior instances when the VIX jumped by more than 50% in a month, the SPDR S&P 500 ETF Trust (NYSE:SPY) initially struggled but then delivered strong gains over the following year.

• One month later: average return of -3.99%, with gains only 40% of the time
• Three months later: average return of -0.83%, with gains in just 30% of cases
• Six months later: average return of +1.96%, with the S&P 500 higher in 60% of occurrences
• Twelve months later: average return of +9.49%, with gains seen in 70% of cases

These 12-month average returns exceed the historical annualized average for the S&P 500, which typically hovers around 8%, suggesting that high-volatility environments create entry points for longer-term investors.

Though timing a bottom is never easy, history favors those who lean into panic with a disciplined strategy rather than exiting during a spike in fear.

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Image created using artificial intelligence via Midjourney.