Oh No! Volatility!

May 27th, 2010 by 

My friend sent me an article the other day which really summarized my thoughts succinctly - he sent me this piece from Evan Newmark writing at the Wall Street Journal.  If you haven't noticed the crazy action in the stock market in recent weeks and days, let me be the bearer of bad news: the major US indicators are down from their yearly peaks.  You've probably lost some money on paper, even.  Between oil in the Gulf, the Greece Drama, and even North Korea, there is a lot to be worried about.  Here's the thing - these are all known unknowns, and generally priced into the stock market already.

On Known Unknowns

I'm not a strict contrarian, but I feel the case is so solid for bad things to happen in this market that the market might turn it on its head.  What does this mean to me?  I invested a fair amount into a biopharmaceutical stock on Tuesday (for the record, PDL BioPharma).  I'm not trying to call a bottom here - the market can, and might, continue down in the near future.  However, I was trying to buy an attractive (to me) company at an attractive valuation - something that became even more attractive in the runup to the present.

Bulls or Bears? (dionhinchecliffe)

Newmark is right - there is plenty of good news to be had on the recovery front.  Companies continue to blow out earnings expectations.  Just today, NetApp reported that its profit this quarter more than doubled year over year.  When he says he's buying shares in his Vanguard account, I believe him.  I just feel it's an attractive entry point.

Or maybe I'm too late - as I type, the S&P 500 Index is up almost two and a half percent.  Happy investing, and post your thoughts!

As always, I am not a financial adviser, so take the above comments as they are - comments from a guy who likes to invest on his own.  I'm not recommending you purchase anything, so use your head and do your research!



PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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