Quote of the Week
“Nothing in life is so exhilarating as to be shot at without result.” Winston Churchill
Last week was a terrible week for equities and some commodities with Energy being the exception. Fortunately, the markets are up big this Monday morning.
Last week we experienced what we call a “short term episodic non-trending volatility spike”. We were clearly on the wrong side of that move in volatility and price.
Last week started off with a good move up on Monday setting a new high for the S&P 500 and our investment model. Most equity and commodity prices were near or at the top end of their trading ranges and the markets were clearly overbought and primed for a pull back. From the all-time high of Monday, the market pulled back about 1% through Thursday. Then on Friday morning Federal Reserve (Fed) Governor Bullard came on CNBC and stated the Fed would be expected to tighten monetary policy earlier than previously stated due to the recent spike in inflation. The market crashed immediately.
The market analysis that we use through our data vendor relies on three factors to determine how we are positioned. The three factors are Price, Volume, and Volatility with Volatility being the most important. If Volatility is declining that is good for the markets. If it is increasing that is generally bad for the markets. Please see the Hedgeye Security Risk Management Process below.
With Governor Bullard saying what he said and the fact that Friday was options expiration day, the Volatility on the S&P 500 spiked from around 14 up to around 20. That is a 34% increase in Volatility which is very rare in one day. As you can see in the Risk Management Model we were clearly in column “one” with Price going down, Volume going up, and Volatility going way up on a one-day basis. Friday was a bad combination of bad factors coming together all at once.
As stated above we believe that last week was a “short term episodic non-trending volatility spike”. We are maintaining our current positioning in the equity and commodities markets. The intermediate trends where we invest are still strong and Friday’s market drop was more of a buying opportunity instead of a pre-cursor to a market decline.
Please understand our system doesn’t predict where the markets are headed. Our system invests your money based on what the markets are doing right now. When the factors change, we will change our investment allocation accordingly.
My son just bought a new car and the following article from ADOT had timely information. Here’s the link: https://content.govdelivery.com/accounts/AZDOT/bulletins/2da5806
Selling a car? Protect yourself and complete a ‘sold notice’
PHOENIX – Thinking of selling or trading in your car? After agreeing to a price, one of the most important things a seller can do is complete a “sold notice” with the Arizona Department of Transportation Motor Vehicle Division.
Wait. What’s a “sold notice” and why is it important?
A “sold notice” ensures that MVD and law enforcement have a record of the vehicle’s current owner. This can protect the seller from liability if the car is involved in a crash or crime, is ticketed, or becomes abandoned, which carries a hefty fee. There is no cost to complete a “sold notice” and it can be done online at AZMVDNow.gov.
Submitting a “sold notice” is easy. Simply, log-in to your account at AZMVDNow.gov and:
- Click on “submit a sold notice”
- Select the vehicle you’ve sold
- Enter the buyer’s information
- Enter the date the vehicle was sold
Additional steps to follow when selling or trading in a car include removing the license plate and transferring the title to the buyer.
It’s a free service and can be done at AZMVDNow.gov
If you have friends or family in need of financial life planning services,
It would be the honor of Laurence Lof Financial Advisors to assist them.
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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.
The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.
Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.