Volatility Holds The Key

What seems to be tugging at the market these days?  Are people worried about the election and the results?  Is it COVID-19 and the potential for a more severe and punishing outbreak?  Is it the economy, which came off the worst performance (Q2) in the history of our nation?  Or maybe the worry is about how our lives have changed, and normal living is going to be years away.

Probably a combination of all these has everyone worried. We can see it in markets, specifically the volatility index. This fear gauge has shown heightened worries for several months, mostly after the coronavirus spread started in early Spring. That worry sounds an alarm across all places wide and far.  

But we are about to come to a crossroads with that mounting fear, a moment where the fear will dissipate and dissolve away, or a new level of worry will take hold causing many to panic. I'm of the notion the former rather than the latter will take hold and we'll see the fear recede, but that is based solely on my years of experience and seeing these things happen over and over again.

By no means am I predicting an exhale or relief.  Further, I could be very wrong in this assessment and we'll have to change our market tactics/strategies for the coming year. The elevated volatility is sending us all a very clear message: Don't take anything for granted, don't get complacent.  

The pundits and analysts will chew over every soundbite, tweet, and interview to stir up your emotions, which are probably swirling around in confusion.

As we've been saying for weeks (and reiterated in this week's webinar), keep the cash levels high, position sizes low, have some protection working, and just wait. Sometimes, that's the best action (inaction?) we can do - WAIT. This shall pass, and those who wait for better opportunities will find themselves in a great position to capture them.