Amid the market volatility, there is one strategy that has served Ritholtz Wealth Management CEO Josh Brown well this year. Every time the Cboe Volatility Index — a measure of expected stock market volatility that is known as the VIX — hits 20, he sells something. When the VIX is between 12 and 20, volatility is considered normal. Above 20 signals that volatility is expected to be higher. “You have to look at your portfolio and say, ‘You know what, I’m taking something off. This is too easy,'” Brown said on CNBC’s ” Halftime Report ” on Tuesday. “Use that lack of volatility as your governor — ‘Am I too long? Am I too eager for the upside?’ That is exactly the moment,” he said. When the volatility index hit 20 this past Friday, Brown sold something. Indeed, this also marked the fifth time he’s employed the strategy this year, he said. That day, the Dow Jones Industrial Average closed more than 150 points higher , while the S & P 500 closed 0.03% lower. However, all three indexes registered gains for the week. On Monday, stocks sank , with the Dow dropping nearly 500 points. “If you stick with that playbook until it breaks, I think you are in much better shape than getting really excited every time the market bounces,” he said. He’d also use it in the reverse — when the VIX starts getting into the upper 20s, do some buying, he said. “I don’t care how bearish you are, go find something to buy,” Brown said.
