We were very well prepared for volatility.
On February 19, 2020, we noted that some of the top ways to prepare for volatility was to buy into these opportunities.
- ProShares Ultra VIX Short-Term Futures ETF (UVXY)
- VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
- iPath S&P 500 VIX Short-Term Futures (VXX)
To date, the UVXY exploded from $10.72 to $24. The TVIX ran from $39.25 to a current price of $112.30. The VXX jumped from $13.56 to $24.45.
While a bottom appears to be in place, it may not be.
The only reason markets were up big on Wednesday is because Biden scored big on Super Tuesday, overshadowing Bernie Sanders.
However, nothing else has changed much.
The coronavirus story is still hot, as the virus runs amok.
Analysts are also strongly advising investors not to buy the dip just yet.
Analysts at Charles Schwab for example, note, “My general rule of thumb, which has been pretty consistent, is if you’re going to start buying on a dip, you need to wait until you get two good solid up days,” as quoted by MarketWatch.
“I don’t think we’ve seen that just yet. People need to be a little bit cautious and wait. We don’t know where the bottom’s going to be, but it doesn’t feel as though it’s here just yet. It’s too risky to be doing any bargain hunting and buying at the moment, but that also means don’t panic and sell out of your 401(k) and retirement portfolios. Just simply wait and see how this plays out,” the analysts added.
Mohamed El-Erian has also said investors should stay on the sidelines.
“I stress, this is different,” he says, as quoted by CNBC. Just because buying market dips has worked in the past does not mean it’s going to work this time "I would continue to resist, as hard as it is, to simply buy the dip.”