Fear in the markets isn't about what has already happened. It's about what could happen next. Losing money hurts. It's painful... and scary. The "what ifs" start to feel like certainties. And that makes it easy for investors to overreact.
It's no surprise. Uncertainty is everywhere – over the future of the economy, tariffs, inflation, government services, and much more.
But as our friend Brett Eversole from our corporate affiliate Stansberry Research points out, huge spikes in investor fear might not be the danger sign you would expect...
Today, we're sharing an essay from him with the details. It published in this past Tuesday's edition of Stansberry's free DailyWealth e-letter. And in it, Brett explains why the recent fear has the makings of a positive setup...
The Highest Volatility Since March 2020
By Brett Eversole, editor, Stansberry Research
Fear in the markets isn't about what has already happened. It's about what could happen next.
Losing money hurts. It's painful... and scary. The "what ifs" start to feel like certainties. And that makes it easy for investors to overreact.
This is exactly what has happened lately. And folks have good reason to worry...
Tariffs have shaken up the world economy. In the process, stocks came darn close to falling 20% from their highs – which would have marked an official bear market decline.
Market volatility has soared to one of the highest levels ever. But surprisingly, this isn't a danger sign. The fear is creating a positive setup... And it could mean a 23% rally over the next year.
A stock "melt up" could soon catch all the bears, doomsayers, and Elon Musk haters off guard. That's according to two men who have worked inside the U.S. government (and even consulted for the Pentagon). The shocking information is public, if you know where to look. But the shortlist of stocks they say are now set to surge... that's another story. Until midnight tonight, see their time-sensitive DOGE update here.
The recent spike in fear wasn't the normal rise you'd expect in an uncertain market. It was the third-largest jump in recorded history.
We can see this using the CBOE Volatility Index ("VIX"). The VIX, better known as the market's "fear gauge," uses the options market to determine the expected 30-day volatility for stocks.
The VIX tends to soar when options traders are seeking protection – in other words, when folks are panicking. And that's exactly what we've seen in the past month.
The VIX surged from less than 20 in late March to more than 50 at the recent peak. Take a look...
The VIX spikes in times of extreme fear. And the recent spike was the third-most extreme reading since the data began in 1990.
The only other times we've seen the VIX above 50 were in March 2020 (in the thick of the pandemic-induced stock crash)... and throughout late 2008 and early 2009 (during the worst of the global financial crisis).
We know those were smart times to put money to work. But to get more examples, I looked at every unique time the VIX spiked above 45. That has happened seven other times. And overall, they were fantastic opportunities to buy stocks. Take a look...
In the words of investing legend Warren Buffett, it's wise to "be greedy when others are fearful." And history backs up that idea. You can crush the typical return on stocks if you buy when fear spikes.
Similar setups led to 3.7% gains in three months, 7.5% gains in six months, and massive 23.1% gains over a year. Plus, stocks were higher a year later 86% of the time.
Of course, there will be more volatility in the short term. There's no guarantee we've already seen the market bottom. But we are seeing the kinds of things that happen near market bottoms.
That's a positive sign. It means the worst could already be behind us. And that gives us the opportunity to buy aggressively once stocks begin trending higher once again.
Good investing,
Brett Eversole Editor's note: For more insights like this from Brett and his Stansberry colleagues, you can sign up directly for DailyWealth...
Just like the Chaikin PowerFeed, it's completely free to read. And it publishes in the morning every weekday that the markets are open. Learn more about DailyWealth and sign up to receive it right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.28%
4
18
8
S&P 500
+0.04%
69
280
155
Nasdaq
-0.01%
15
58
27
Small Caps
-0.63%
248
1147
494
Bonds
-0.81%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Information Technology
+6.02%
Industrials
+3.99%
Communication
+3.82%
Consumer Discretionary
+3.65%
Health Care
+3.49%
Materials
+2.96%
Financial
+2.18%
Real Estate
+2.05%
Utilities
+0.73%
Consumer Staples
+0.07%
Energy
-0.91%
* * * *
Industry Focus
Aerospace & Defense Services
12
19
4
Over the past 6 months, the Aerospace & Defense subsector (XAR) has outperformed the S&P 500 by +12.29%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #3 of 21 subsectors.
Top Stocks
TGI
Triumph Group, Inc.
WWD
Woodward, Inc.
ATRO
Astronics Corporatio
* * * *
Top Movers
Gainers
STX
+11.56%
TT
+8.45%
WDC
+7.98%
VMC
+6.92%
REGN
+5.25%
Losers
SMCI
-11.5%
CSGP
-10.31%
EIX
-8.89%
GRMN
-8.44%
FSLR
-8.32%
* * * *
Earnings Report
Earnings Surprises
MAA Mid-America Apartment Communities, Inc.
Q1
$1.54
Beat by $0.67
ALL The Allstate Corporation
Q1
$3.53
Beat by $1.00
IP International Paper Company
Q1
$0.23
Missed by $-0.14
VMC Vulcan Materials Company
Q1
$1.00
Beat by $0.24
PTC PTC Inc.
Q2
$1.79
Beat by $0.39
* * * *
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