Keeping your focus in a shape-shifting market


Since November of 2014, the S&P 500 Index has traded in a tight range of approximately 1970 to 2030–that is, until the middle of August.  

Rather abruptly, the tranquility disappeared and volatility came roaring back.

There were concerns over a slowing China, emerging markets instability and the possibility the US Federal Reserve could raise rate.

 

Stocks

 

 

Guessing Game

However, these things didn’t just come out of nowhere to suddenly catch the market by surprise.

There has been the talk of a Fed rate hike now for quite sometime.

China’s GDP growth rate has consistently been declining since 2010.

Emerging market softening is nothing new: Countries like Brazil have seen slowing since 2014.

 

Mood Swing

October arrived and it was as if all these fears disappeared overnight. The market moved up just as quickly as it moved down.

What changed? Basically nothing.

The market pays attention to what it wants to.

In the first half of the year everything was about Greece. Did Greece just suddenly disappear? No.

 

Invest with Care

Unfortunately, in today’s fickle environment you have to be extra careful in selecting investments.

You really need to understand what your company does and how the changing environment can affect your investment.

You need to think logically and not get caught up in the market and media excitement.

 

Long Game

Market sentiment shifts to extremes: As of October 29, the S&P 500 Index is right back in the middle of the range I mentioned earlier, right around 2090.  

Will the market go higher or lower? I’m not sure.

I do know that looking at my All Cap Growth Investment portfolio I am comfortable with my positions should the market move in either direction.

I have a long-term view and I buy my investments with the same idea.

Understand what you are up against and be prepared. That is all you can do in this type of environment.

I am fairly certain that in another month or so the market will be focused on something new.

 

Photo Credit: Karl-Ludwig Poggemann via Flickr Creative Commons

Author profile

Mott Capital Management, LLC
Mott Capital Management, LLC
Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape generational and demographic shifts. Mott uses a philosophy of buying these companies for a 3- to 5-year time horizon, with the belief that a long-term holding period gives themes and our chosen companies a chance to fully develop. In our view, the long time horizon also serves to mitigate the risk associated with the short-term impact of market volatility.