What Brokers are Saying Regarding the VIX

* When volatility is greatest, it is a sign of a market bottoming out, based on investor psychology and history

* When the spread between bid and ask prices widen, that is the sign of a market bottoming out, based on investor psychology and history

* We're seeing bid/ask spreads growing in stocks and sub $5 shares

* The VIX is absolutely through the roof, implying an increased likelihood of a market bottom

* A high VIX gives a direct correlation to levels of uncertainty

* Greater uncertainty means investors are less willing to pay for (or tolerate) speculation.

* This results in money pouring out of speculative stocks, combined with stampede selling, which has brought share prices down well beyond realistic levels

The result is that oversold stocks have a two-fold upside:

1. Their business can pick up from an operational perspective (meaning they make more money each quarter as they execute on their business plan). The stock's price will likely follow the results higher.

2. Overall market speculation can return (slowly and given time) resulting in an increase in share prices.

This is a great opportunity for cash that is on the sidelines to be invested. With all the chaos, fear, and panic, you'll be robbing people as they throw away their stocks.

To bolster my opinion, here are the facts of what to expect:

* The VIX will settle down, as it always does

* The market and the economy will recover over time, as it always has in the past, and as it always does

* Speculation will return to the markets, as it always does


If you can have patience and be greedy both at once, I can't think of a better investment strategy in this market environment. Be greedy as you scale into the bargains, and have patience as they recover and balloon your worth.