Investing during Volatility: A discussion on tactically buying stocks in extreme market environments

Wednesday, February 24th, 2016
Written by Manifold Fund Advisors

After January saw the S&P 500 fall by 5%, more advisers are settling into the reality of extreme volatility and examining what that means for their investments. Some tactical strategists and advisers joined the conversation in a February 1st Investment News article, “Market Volatility has some advisers tactically buying stocks.” While the general consensus is that there are always buying opportunities after a pullback, this is not a market for short-term horizons and the overall tone is summed up by the phrase, “be careful.” Our CIO Steve Wruble’s technical analysis points to a very weak market, noting downward momentum comparable to 2011, and short-term moving averages that have not been this negative since 2008. However, the increased level of volatility can create opportunities for strategic stock picking and lessen the emphasis on riding the waves of broad-market indexes. While Steve values well-researched tactical approaches, for the more adventuresome he comments, “if you’re in the mood for some opportunistic buying and you’ve done your homework, you could buy some [stocks that are] down 10% or 20% from recent highs,” but advises this is not a time to “play around.” With sector swings joining stock specific dispersion, exercising caution remains a prevailing sentiment, but advisers are seeking to remain optimistic and identify ways to take advantage of market fundamentals at play.

The views and opinions expressed in this article are for informational purposes only and not for the purpose of providing investment advice, are those as of the date of the article, may differ from those of the firm and are subject to change over time or at any time. Opportunistic buying and downward trending strategies discussed in this article do not ensure a profit and cannot protect against losses in a declining market. The investment strategies discussed are not appropriate for every investor and investors should review with their advisors the appropriateness of any investment strategy. Manifold Fund Advisors LLC makes no guarantees on the completeness or accuracy of information provided herein.

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