Challenging Times

We live in challenging times, but when has anything ever been smooth sailing?  The financial markets are aware of outstanding issues in the world, and collectively price them in accordingly.  That’s why the surprises (both good and bad) have the tendency to result in overshoots of market reaction.  For example, despite Tuesday’s “crisis,” markets were already up again Wednesday.  In October, the S&P gained 11%, which helped reverse a good bulk of August and September’s losses.  Despite the high degree of volatility, however, we are not as far away from late July’s level as it might appear. Read more