There is a lot of uncertainty rather than volatility. The VIX is at 18 and had spikes over 20 last year and the year before and the year before that.
Also, there’s this:
Investors are now less fixated on one particular variable — like a key inflation report — than in recent years, making the market more resilient to macro shocks, according to analysts at 22V Research.
Today, they say, seven variables — ranging from geopolitical risks to interest-rate moves — explain half of the S&P 500’s volatility, a sign of steadiness that has climbed back to its pre-pandemic level. It takes a greater breadth of concerns now than in 2017, when US President Donald Trump started his first term in the Oval Office, or in 2020, when almost 70% of S&P 500 volatility was driven by news about Covid-19, to move the stock market, according to 22V.
“More variables, like earnings, industry group, and factor exposures, matter,” said Kevin Brocks, director at 22V Research. “The macro picture has improved and the economy is further from recession.”
As Wall Street’s attention is getting divided between a bigger number of factors, investor focus on corporate earnings — one of the key drivers of the stock-market rally — is on the rise.
The most important thing I’ve learned about investing over the past 50 years is that the S&P 500 return beats 95% of professional money managers and 98% of amateur stock pickers. If you haven’t enjoyed the 20-fold return of the S&P 500 over the past 30 years (with dividends reinvested) in your own, personal investing activities, maybe it’s time to reexamine what you’re doing?
It’s almost like you could go to engineering school, never attend a class or crack a book, and still get a lifetime income equal to or greater than 95% of your classmates. It’s kind of crazy that most financial advice doesn’t include this simple truth.
Then again, maybe it’s not that crazy. The whole financial services industry business model relies on you not knowing this, and tolerating the elevated skim rates applied to professionally managed products.