Don’t Get Spooked

The recent market volatility has brought out the market skeptics once again and any sign of downward movement tends to send short term fear through many investors. Tuesday, the VIX (a measure of market volatility) hit its highest level since March. This level of volatility can create nervousness and fear…don’t let fear drive investing decisions. If an investor were to panic and sell, then the largest daily gain of the year would have been missed. Yesterday, the S&P moved higher by 1.7%, the largest daily move since October 10, 2013. The one day move of 1.7% is higher than the current 5 year yield on the U.S. Treasury bond of 1.55%.

We will continue to watch market fundamentals and corporate earnings. We kicked off the corporate earnings reports yesterday afternoon with Alcoa, who posted very positive results of 31 cents/share compared to analyst estimates of 22 cents/share and top line revenue of $6.24 billion against estimates of $5.84 billion.

While there is plenty in the world to be worried about, economic fundamentals remain strong and corporate earnings continue to impress.