Tom Gardner

It's clear that we're at richer valuations in the market today.

And that means we should be taking a pause and making sure that we're ready should the market decline.

There are a number of factors to look at when we look at the stock market's valuation today.

It's worth taking some time.

It doesn't have to drive actions in your portfolio.

I mean, I guess the first thing every investor should answer is, do you think things can go too far in markets?

And if you do, if you do think that's possible, if you look back in history and see major run and major collapse,

you probably want to start to study what are the dynamics?

What are the patterns?

What are some of the factors that I could look at to determine where we are in the market cycle?

Let's start with a light one.

We have a relatively low VIX.

That's a measure of the volatility of the market.

It's relatively low.

And when markets are doing well, you actually see a reduction in the volatility because people feel comfortable.

It's like the water's safe.

I'm going to go swimming.

Everything's great, right?

But when things become treacherous and they start bailing, stocks become very volatile.

So there's a calm sea right now in the market.