Until I started Stocktwits (late 2008), I never thought much about sentiment and volatility. It seems to consume many of the traders though on our site.

Today, I think both are marvelous tool for traders and investors. The Stocktwits crowd in my humble opinion is sophisticated. Sophisticated enough that our data shows a strong bullish sentiment for the last few years…a leaning that has been dead right.

On Thursday, Small Cap stocks volatility hit an all-time low . Alone, this data point means nothing, especially since the reading only goes back to 2004. But, other $VIX readings across most US markets were at or near all-time lows as well.

These low readings are telling investors that risk is on. US investors and traders are not worried. They are confident about ‘something’. Maybe they are leaning too confident. Time will tell.

As a reference, risk was a filthy word in 2008. The $VIX across US markets hit all-time highs in the 80’s and 90’s. Those readings proved to be the point that investors should have been buying. I remember being part of that scared reading, but also buying. I just knew that as bad as it felt, history indicated that you buy panics. In hindsight…phew.

I remember spending a lot of time in New York in 2008 and the panic showed up in the start-up world as well. Entrepreneurs were not scared and none knew of the $VIX, but the fear showed up in the prices of financings which were all in the $2-$3 pre money valuation. I invested a lot without a $VIX tool to guide me in startups. Today, many first time entrepreneurs are getting $6-$10 pre money valuations. My reading of this is a $VIX that is too low.

Things have changed quite a bit since 2008’s panic. Social Networks have truly proliferated. We are all holding hands, 24/7/365. For the next 5-10 years, it would not surprise me to see very low volatility periods with a lot more extreme spikes that settle quickly. The consumer that should have died, is connected to $AMZN Prime, ‘Fab’ and ‘One’s King Lane’ on their mobile phones. Everything is available from everywhere. Even the start-up world has a network with some very interesting market data. That network is Angel List.

There are only 15,000 listed public companies. “@fdestin: A staggering 40,000 startups haved used @angellist !online.wsj.com/article/SB1000…” $$

— howardlindzon (@howardlindzon) January 27, 2013

Angellist is a brand new database. It already has a fast growing marketplace for talent, though it was started to help entrepreneurs raise capital for their business from accredited investors.

Locked in this new database and community is it’s own measure of volatility, the ‘Angel List $VIX’ as I would call it, that will lend more insights eventually to the more liquid upstream markets.

Like all tools, I think the shrinking of the world, the 24/7 global nature of the markets and the new data sources available have changed the way investors and traders should be using these tools.

The markets are all connected and the art and science of reading the tea leaves is in my opinion, more artistic than ever.