eResearch Blog: Volatility Part3

Stock Market Volatillity

In previous blogs, we discussed the volatility of the stock markets.

We think market volatility is going to continue over the near-term. The recent wild market swings underscore the volatile scenario we commented upon earlier. Even with a cut in the fed funds rate, there are still considerable risks, including: too much debt, irresponsible ratings agencies, not enough regulation in the derivative markets, hedge funds not marking to market, and too much optimism regarding corporate profits.

Time is needed to wind down prevailing excessive credit. This will continue to make headlines and, in turn, continue to result in stock market volatility.

As we have promulgated frequently in the Clarion, we advise investors to raise their cash positions and await more favourable buying entry points. Assemble a list of companies that you would like to own and the price that you would like to buy them at, and then wait for the moment. Be realistic, otherwise you might come up empty-handed. This approach should position your portfolio well when the bull market resumes.