Hold on to your seats

The VIX index, shown above, uses options prices to measure expected stock market volatility over the next 30 days. It closed yesterday at an extraordinarily high 46.72. Meanwhile, the TED spread, the difference between the interest rates on inter-bank loans and T-bills, stands at an extraordinarily high 325 basis points, suggesting heightened anxiety about bank defaults.

Warren Buffett has said, "you should get greedy when others are fearful and fearful when others are greedy." If he is right, then this is the time to get greedy. There is no doubt that most everyone else is fearful.