Joe Tigay Don’t Let Election Jitters Spook Your Portfolio: Why Volatility Control is Key
Buckle up, investors! The market just delivered another wild ride, with tech giants getting dumped in favor of riskier bets, and indexes sending mixed signals. But this is just a taste of what’s to come. As we head closer to the November elections, volatility is set to become the new normal. The October VIX future, a key indicator of expected market volatility, is already trading at a hefty premium, surpassing 18 – a clear sign that investors are bracing for turbulence. Don’t get swept away by the chaos! In this blog post, we’ll delve into why volatility control is the ultimate weapon for navigating these uncertain times.
Market swings are getting wilder!
While recent inflation data has Wall Street cheering, it’s also causing some head-scratching volatility. Investors are dumping tech giants for riskier bets, with the small-cap Russell 2000 surging past the Nasdaq 100 by a whopping 5% – the biggest gap since early 2021.
This unpredictable environment highlights a crucial strategy for savvy investors: volatility control. Stock futures are pointing downwards after a record-breaking day, despite the Nasdaq’s impressive 1.2% jump on Wednesday. The Dow, however, tells a different story, closing lower. This mixed picture underscores the uncertainty plaguing the market.
Here’s why controlling volatility is key, especially with the upcoming election adding another layer of uncertainty to the remaining months of 2024:
- Election jitters: Historically, elections are a period of heightened volatility. With the ballots looming, investors are likely to become even more cautious, potentially leading to sharper swings in the market.
- Unpredictable Fed: The Federal Reserve’s interest rate decisions significantly impact the market. While a rate cut seems likely based on the recent CPI report, the exact timing and its effects remain unclear.
- Shifting investor sentiment: Investors are chasing riskier bets, as evidenced by the outperformance of small-cap stocks. This trend could reverse quickly, depending on economic data or upcoming news.
Take a deep look and decide if your portfolio is equipped to weather the storms of the remaining year, regardless of what the election or the Fed throws your way. Remember, a cool head and a well-managed portfolio are your best weapons against market uncertainty and volatility control.
