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Volatility Is Here To Stay

Daniel Laboe

The past 8 trading days have experienced 1,000+ point Dow swings, and the VIX (the fear index) closed at 82.69 on Monday (March 16th), its highest level in history. The length and extent of this pandemic effects are still highly ambiguous.

The markets have priced in a recession with the S&P 500 roughly 30% off its highs. Analysts are anticipating significant GDP declines for at least the first two quarters of 2020 and could extend into Q3.

One thing is clear: the market volatility will remain until this virus is under control. Fund managers and analysts are now anticipating a U-shaped recovery, a change from the rapid V-shaped recovery that was initially expected.

As a long-term investor, I am beginning to buy discounted equities with caution. Price-averaging down on all the red days. I am slowly adding positions in stocks like Adobe ADBE, Facebook FB, Microsoft MSFT, and Disney DIS.

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