Fear has dominated North American equity markets in recent weeks. The VIX Index, frequently called the Fear Index, spiked to as high at 48 percent on August 8th. Last Friday, it remained elevated at 45 percent.
Fear is understandable. Since July 8th the S&P 500 Index has dropped 17.1 percent, the Dow Jones Industrial Average has fallen 15.2 percent and the NASDAQ Composite has plunged 18.7 percent. Since July 22nd the TSX Composite Index has fallen 11.2 percent. Volatility in equity markets continued last week when the Dow Jones Industrial Average recorded gains or losses in excess of 400 points on four of five trading days. Where do North American equity markets go from here?
Warren Buffet famously said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”. Recently, Mr. Buffet confirmed that he has been a buyer of equities during the current period of weakness.
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