
An Investment Lesson for the Ages
Last month stock markets experienced a mini crash, accompanied by dire headlines and prominent Wall Street experts calling for emergency Fed rate cuts. After a long period of serenity in the markets, we experienced a few strong down days. In addition, the VIX, which is a measure of volatility, spiked above 60.1 The last time the VIX spiked so much was during the Global Financial Crisis and COVID. Was this that bad? Of course not. There were “reasons” for the move, but none of them were good or lasting. The main reason for the drawdown and spike in volatility was that investors overreacted. Within a few days of this mini crash, the markets experienced a strong recovery. It took less than two weeks for the markets to recover. It was as if the mini crash never happened.