Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
X •  LinkedIn

  Fight Or Flight?
Posted Under: Broader Stock Market
Supporting Image for Blog Post


View from the Observation Deck

  1. The volatility/sell-off in the stock market over the past couple of days is understandable, in our opinion. The backdrop was ideal for profit taking. 
  2. Year-to-date through 6/17, the S&P 500 posted a total return of 16.07%, or an annualized pace of 38.25%. Since 1926, the average annual return on the index was 9.84%, according to Ibbotson Associates/Morningstar.
  3. The Federal Reserve's slightly more optimistic tone about the state of the U.S. economy following its latest FOMC meeting (6/19) was bound to spook some investors, even if it stopped short of announcing an end to its easing initiatives.
  4. We believe that some investors have mistakenly attributed all of the credit for the strong performance of stocks to the Federal Reserve's highly accommodating monetary policy and commitment to artificially low interest rates.
  5. We encourage everyone to read Brian Wesbury's (Chief Economist at First Trust Advisors) research report from 6/19 titled "Fed Slightly More Optimistic" at www.ftportfolios.com for a different take. 
  6. Anxious investors should take comfort in knowing that the S&P 500 gained an average of 16.0% over two years the last four times the Fed started raising rates, according to Bloomberg Businessweek.
  7. The chart paints a 20-year picture of the relationship between volatility (VIX Index) and the price movement of the S&P 500. Volatility, for the long-term investor, is little more than background noise.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. Past performance is no guarantee of future results. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance. The Chicago Board Options Exchange Volatility Index (VIX) reflects a market estimate of future volatility, based on the weighted average of the implied volatilities for a wide range of strikes.

To Download a PDF of this post, please click here.

Posted on Thursday, June 20, 2013 @ 4:25 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

Learning From Recent Market Stability
People’s Interest In Hybrids Extends Beyond Cars
Take-Two: The Buy And Hold Investment Strategy Is Not Dead!
S&P 500 Valuation Snapshot
A Time of Transition
Only Half Of This Story Is As Good As Gold
The Only Constant Is Change – Most Of The Time
Little Reason To Be Defensive In This Recovery!
We See The Glass As Half Full
This Indicator Shows That Interest In Technology Companies Is Rebounding
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.