One year ago this week many were wondering if the economy was going to collapse. The market found itself at 666 on the S&P. Most investors had once again lost 50% of their life savings for the second time in less than 10 years.

I was seriously worried that we were not going to be able to break out of the economic "death spiral" that started in the fall of 2008.

Up until recently, many investors were unaware that there is an ETF that tracks the VIX Volatility Index. Its ticker is VXX. The VIX generally moves in the opposite direction of the market, so it is more of a hedge or a short bet on the market than anything. As shown below, VXX has gone from $110 down to the mid-$20s since the bull market started last March. As shown below, the ETF didn't trade much volume in 2009, but over the last few months, its daily volume has picked up immensely. In 2009, the ETF averaged 956,000 shares a day. So far this year, the average daily volume has been 6,500,000 shares.

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With the VIX hitting multi-year lows recently, I think it is time to take a look at purchasing some insurance against market uncertainty and downside risk. The SPY is hovering around it's highs and very well could keep charging up higher. However, at this point in time I believe the downside risk of unaccounted for macroeconomic problems and potential negative surprises in equities could create a downward spiral that could shave 10-20% off of current valuations.

I am not a doom and gloomer, and I think that for the most part SPY is close to fairly valued, but perception is reality and the disaster of 2008 is still not erased from investors' minds. I do not believe it would take a black swan event to create a scenario where investors scramble to take profits, and/or buy the VIX for protection.