Top Advisors Corner

W.H.C. Bassetti: Bizarre Bungee Markets...


This is a line chart which shows the volatility close to close. The recent days have been, in some cases, historic and bizarre - so much so that we made a note of the daily ranges, which are to say the least, unusual: 562 (7/31), 626, 735, 632, 345, 354, 593, 536, 564, 593, 1300 (closed down about 800, or 3% - a historic record). Looked at from a different perspective:

Even if you are not made seasick here, there are other reasons to look askance at this market. Namely, we are in a pattern which may presage even more distress. It is not our practice to "recommend" stocks or positions; rather, we analyze the markets and inform our readers as to favorable and unfavorable trend conditions. The result is obvious: one invests with the trend, bullish or bearish, and adjusts his portfolio according to the trend and the strength of the trend.

At present, we may well have broken, or at least have thrown into doubt, the historic Obama trend from 2009. As always, the market condition is ambiguous and subject to interpretation, and investors must factor in uncertainty. Then, the level of perceived risk versus reward must be evaluated. Trend direction and volatility -- as well as, for example, political and economic conditions -- are the major factors in determining risk. At present, we are in a downwave with fearsome volatility.

For our own accounts, our positions are the smallest they have been since 2009, a very little AAPL, AMZN, UPRO.

W.H.C. Bassetti

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