Tom Takes a Reactive Approach to Market Volatility
Transcript:
Katie Nealis:
Many investors are hedging against market volatility as summer approaches. Do you agree with that? And why?
Tom Vaughan:
No, I don’t. Again, I am a huge believer in the concept of reaction and not prediction. And I know that sounds really strange. But I don’t believe you can actually predict. So if you’re trying to, you know, get ready for summer volatility, you’re predicting that there’ll be summer volatility. I’m going to wait and see what happens and react to that if we have that type of volatility or not. Because I mean, I’ve just way too many times, I’ve seen people make predictions perfect, almost every time to be honest. Especially the more people for whatever reason, the more people that are making one prediction, the more the market goes the other direction. So I really don’t, you know, try to invest in that way. So it’s kind of an indirect way of answering that question. But I just don’t do predictive methodology, I do reactive that’s worked much better for me.
Once in a while, I’ll do something slightly on a predictive basis. If I feel really strongly about it, like right now, I do have a lot more money invested in things that I think will do well in this reopening. And I think the reopening is really going to start to take off, you know, the second half of this year. Oh, yeah. And so that’s a little bit predictive, although most of the charts look a lot like that dividend chart that I just showed you. So it’s not like you know, they’re at the bottom and falling apart. These are things that have already shown some trend. And to me, that’s I’m reacting to trend. So you know, sometimes that trend is down and I’m gonna react to stop losses and all these different things that I do. Sometimes those trends are up and I’m you know, buying those and looking at those but I am I am overweight and the reopening stocks at this point in time. And they’ve only done medium actually, since I got into them in March so far, but I feel great that they could do quite well. This is a really unique environment. But generally speaking for something especially short term, like, you know, volatility this summer, that’s not something that I’m going to react to unless I need to and I’ll, you know, I’m not going to do it in advance because I don’t know that it’s going to happen.