I'll write more on the weekend, but the action in the market has been pretty crazy, this week. Big cap tech is really struggling, and while there've been some big winners in the market, there've also been some big losers.
Hedging has saved me a lot of money this week. Given that it's the end of the month and we already saw a pretty good decline and jump in volatility, I took off my short-term hedges, today. I'm still carrying most of my longer-term hedges, but it usually makes sense to take some protection off on a significant decline. In the day-to-day, reversion is common.
In general, this has been a tough market. For example, I think GOOGL had quite good earnings but couldn't manage to end the day up 3%. Meanwhile, modest disappointment in MSFT earnings led to a -5% decline. I expect continued volatility, up and down, through the election. Personally, I've been trying to shrink my equity exposure and am focusing on Quality at a Reasonable Price (QARP) stocks.
You'd think we would bounce eventually, but it's hard to say when. I'm mostly just staying patient. For what it's worth, based on the VIX curve, the market seems to think we'll know the election results about a week after the election, volatility will relax then, and we can have a party. I'm definitely not saying that will happen, it's just what the market expects.
Between now and tomorrow we'll get more major earnings plus non-farm payrolls to move markets up or down plus the chance of the traditional Friday volatility crush. I'm primarily expecting a rangebound market until the election, so my tendency is to just push a little against any big moves. Thus, today's move down has me selling a bit of protection.