If you watch CNBC or another financial network, you still hear how terrible the economy is with no end in sight. While I agree that things are still not good and the nation must take a defensive attitude toward their finances, it’s important to look at where we were versus where we are. To illustrate, I put together 5 facts that seem to indicate that things are better.
Less big swings– Remember the 900 point swings? Remember how many days we went without double or single digit moves? Remember when it was big news that the Dow Jones Industrial Average ONLY moved in double digits? We’re in a different place now. Although we still have some big moves, we are now seeing routine double and single digit moves as opposed to those huge triple digit swings.
The VIX– The VIX is a measure of market volatility. In a normal economy, it is down around $12. During those big market moves, we saw the VIX above $80! If you look at it now, it is at $43.67 as of February 6th. This is a very reliable indication of volatility and a market that is highly volatile is not in good shape. With volatility going down, the health of the market is going up, although slowly.
Diversification is working again– While this is more anecdotal, I have heard a lot of investors again talking about diversification. I remember not too long ago my entire portfolio was moving down. There was little to no sector movement to be seen. Fast forward to now, I’m seeing sector movement where my entire portfolio doesn’t need watched everyday.
Fundamentals slowly returning– We’re seeing less panic selling and more movement based on fundamental reasons. Many will argue that bad news is priced in to the market and most of the panic sellers are already on the sidelines. Maybe that’s true but I’m not concerned about that. I’m happy that I can again research stocks and expect movements based on some sound reasoning. I’m not saying we’re back to normal but it is better.
“Experts” are recommending stocks- There still aren’t a lot of analysts and other “experts” speaking the praises of stock trading but some are. That’s better than just a couple of months ago.