Risk Returns – And So Does Fear
by The Investment U Research Team
We’re starting to see another emotion climb back into the market mentality in the past couple of days: Fear. After 30 days of positive movement in the S&P 500 (.INX) we’re starting to hear more trepidation and concern that this surge has gotten ahead of itself.
The VIX has been giving signals that September may turn ugly, and European markets stumbled at the prospects that the U.S. economy hasn’t entirely restarted.
After all, we’re already talking about a Goldman Sachs’ (NYSE: GS) Bubble
Early reports that futures and European stocks are moving down today may be overdone though. While the markets may be due for a pullback on fundamentals, this markets is still stretching a little based off market optimism.
We’re not going to see massive drops in the markets as we have in the past year. Quite simply, it’s because there are too many people still sitting on the sidelines. They will use these dips to move back into the markets, and blunt any large downward movements.
After missing the past 30% rise in the indices, they won’t want to miss out, and they will provide a cushion that we haven’t seen for a while as risk has returned.
Symbols mentioned in this article: .INX and GS.
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