We've all heard that famous quote from Franklin D. Roosevelt in his first inaugural address. It's a saying that has had staying power for over 80 years. And it's something that rings true today in the current and volatile market environment.
It starts with the VIX which hit a level on August 24 that had not been seen since March, 2009, when the market was in tatters and bottomed. And even before that the VIX had skyrocketed to an historical high that might never be seen again.
Whether or not this recent fear is warranted hardly matters. It is what it is. But it's worth examining some to see how the period we are in now stacks up to the environment back in the 2009 time period.
For those who rely on studying stock charts for a living like I do, the assumption is everything going on in the market is baked into the charts we look at. I buy into that theory. But sometimes under unusual circumstances like we've experienced recently you have to take an extra step back and think things through instead of relying on just one source.
For example, when the VIX was last in the 50's the S&P was at 666. When it hit that 50+ level recently the S&P held at 1867. Also, GDP was in negative territory back in 2009 with the unemployment rate peaking at 10%. The most recently revised GDP was over 3% with the unemployment rate now at 5.1%. What about housing? Back in 2009 the housing market had collapsed, foreclosures were rampant. Today? A completely different picture with strong recoveries in many pockets of the country. And, who could forget the TARP program, where $700 billion was funneled into banks so they wouldn't collapse. So really, there is no comparison between now and 2009. Yet traders are scared to death.
This is why it's time to put things in perspective, to stop worrying so much about the Fed raising rates, something that has dominated the headlines for a long time. If anything, a rate increase would take the mystery out of the equation. And this in turn could help get the market back on track. And if the Fed doesn't raise rates for a while? It won't be the end of the world.
I've decided to host a webinar this upcoming Tuesday, September 8, sometime after the market closes. During the webinar we'll look at some big names that are now on sale, stocks that traders could not get enough of just a few weeks back that no one wants to touch now. We'll also look at some companies that had strong earnings the last quarter and held up quite well during this recent bout of selling. If you're interested in attending this FREE event just shoot me an email to john@investedcentral.com and I will get back to you with the details..
At your service,
John Hopkins
President
Invested Central/EarningsBeats.Com
