The current market environment is unprecedented; as the Fed pulls back support, stocks are trading lower as the market tries to find its balance. The high valuations that some stocks in the upper echelons of the market have enjoyed are tumbling. In this volatile environment, investors might want to look at recent comments from two legendary investors, advises an article in Barron’s.
Macro hedge fund manager and CEO of Tudor Investment Corp Paul Tudor Jones recently told CNBC that “you don’t want to own bonds and stocks” with the market the way it currently is. Meanwhile, Warren Buffett of Berkshire Hathaway is busy buying up stocks and acquiring companies. Their attitudes should signal to investors to start buying, the article contends.
If the fear that the stock market will never go back up is what’s holding you back, that’s a sign to start “your own personal bull market,” the article maintains. In the options market, uncertainties are driving up the Cboe Volatility Index, which recently went above 30—a rare occurrence. So while the stock market might balk at uncertainty, the options market thrives on it. When investors hedge their stocks and portfolios with puts, that fuels fear premiums.
There are certain sectors that will always be necessary in the world: banks, pharmaceuticals, tech innovation, cars, machinery, among others. Take a look at your surroundings and see what items you can’t live without—those are the companies to add to your holdings. And if you’re having trouble finding one stock to buy, consider purchasing an index such as the SPDR S&P 500 ETF Trust. As some investors start to shy away from stocks, the options market is a good place for smart investors to go in order to keep their decision-making levelheaded as well as take advantage of that fear.