Stay Grounded to Get Rich
Don’t Fall for Scare Tactics: They tell only half the story
Authoritative voices boomed a message of fear this afternoon. A late market sell-off sent shares sharply lower during the final stages of a day when the bond market was closed and volume was low.
Almost all today’s loss came in the final 45 minutes of trading. In fact, the broad market had been higher than Friday’s close just minutes ahead of 2 p.m.
After 4:00 p.m., stories like the one excerpted below started hitting the street. They wanted to ensure that every reader knew that the VIX (the volatility index) had hit its highest reading since early June, 2012.
The chart showed that fact to be 100% accurate. But... what message was that extremely high VIX reading really conveying?
It is what the fearmongers were nottelling people that was most important.
Traders and investors needed to know whether 2012's very elevated VIX was a time to be getting into stocks, or their last chance to get out before suffering further damage.
The June 2012, spike in VIX occurred after a quick 10.6% correction from the end of March peak. The October 13, 2014, surge in VIX came after a 7.2% pullback from the SPY’s Sep. 19, 2014, all-time high to $187.41 on the S&P 500 ETF (SPY, Financial)
Is the current decline done? Nobody can say for sure. The fear, though, is palpable. That suggests we are likely at least close to a turn.
Everybody has an agenda. Media outlets need high emotion to juice ratings. Bearish newsletter writers are praying for a bigger sell-off to achieve vindication after missing the major bull run. Underperforming fund managers are desperate for a market collapse so they can buy cheaply and get a fighting chance to catch up with their competition.
Think for yourself. Make buy-sell decisions based on value, rather than charts and emotion. You’ll end up saner and richer.
