Volatility is Back!
October 8, 2014

Over the past two weeks we have seen something for the first time in about three years…volatility. The list of usual suspects include turmoil in the Middle East, Europe’s struggling recovery, China or even the slow growth in the US which coupled together, create a market filled with uncertainty. In the short term, this uncertainty creates volatility (selling) in the markets which leads to our favorite…opportunity.

As many of you probably recall, we anticipated increased volatility for quite some time. It is a normal, natural part of healthy markets. During the Fed’s QE over the past few years, we have been lulled into thinking the market doesn’t correct more than about 6% when we know better. The current market has not had a 10% correction for more than 1,000 trading days. Statistics never predict the future but they are helpful in keeping our perspective.

As an investor (not a trader) we prepare, plan and patiently await for opportunities. This current volatility is likely to continue and eventually opens the door to discounted equity prices. Yes it can be uncomfortable to watch the market fall but ultimately those who are patient and discipline will be rewarded.