Volatility is real. Volatility can prove a gift. Volatility and disruption–like sector rotations–create opportunities. We all know that. Do we remember it when the air’s full of flak and smoke, and noise? In the absence of any systemic concerns, this volatility has been creating bargains. That remains the mission on Monday. How does that fit with your risk tolerance?
Risk tolerance is also real, as real as risk itself. Overestimating our personal risk tolerance can be expensive. You really don’t want to learn your personal level today, or last week. “Tolerance” does not mean a lack of concern, or even pangs of fear. When the market drops from 800 down to 1600 down in 20 minutes you should be scared.
The share price of individual stocks rises and falls as demand waxes and wanes. Disruptive market events and garden variety rotations both effect share prices. When share prices in general are growing we have a bull market. Bull markets do not run on air, and that is the point. Bull markets are created by buying pressure. Buying pressure requires a money flow to support it. Money is not endless. That means bulls cool when the new money stops flowing inward. Same story is true for high growth stocks, like five of the ten we’re in.
Bull markets are created by buying pressure. Buying pressure requires a money flow to support it. Money is not endless.
The above describes general market dynamics. What do we expect today? As of early this morning indications are good for our open today. Both the Shanghai A and B are up, and Europe is more than 1.25% across the board, S&P Euro 350, CAC, DAX. We think an up opening is likely. How challenging is that? Bargain hunting today may be more difficult. Everyone went down last week, but many names rebounded substantially on Friday.
Fix your buy list. Check your valuations, as many may yet be down from last week. Sales don’t last forever. Enjoy, if we rebound. Hunt, if we don’t. Hunt anyway.
Thanks for reading. Keep looking.