As expected, market volatility is now the name of the game. This volatility will most likely continue for the foreseeable future. As we get passed the earnings reports and get into the holiday shopping season, markets will see even further volatility. Mutual funds, hedge funds and private investors will all begin (or have already begun) repositioning their portfolios to minimize tax exposure and fine tune their window dressing.
This rotation should provide buying opportunities in most sectors. Earnings reports have held up better than expected and while international turmoil, Ebola and European banking woes have weighted on the markets, the overall economic picture remains positive for the foreseeable future.
The question on everyone's mind should be : What do should I buy? and When is a good entry point? The answer of course will vary based on your individual portfolio, needs and risk tolerance.
For my end, I am looking for beaten down companies that I can buy at a discount based on an assumed rebound in the next 2-3 years. I should be noted that I am not very risk averse at this time and my preferred strategy is a 2 year out option to hedge my short and midterm exposure. My pick of the day is: JCP / 2017 10$ Call Options / Price : $1.75
My Reasoning: The company has been beaten down quite a bit, one of the main competitors (Sears) continues to spiral downwards, a new CEO has just been named to right the ship and we are entering the holiday season. All these elements combine will certainly decide the future of this company. The next 12-18 month will either yield a big rebound or future erode the company's value.
Down and down we go, but are we reaching a floor? It's hard to say given the potential for so many negative catalysts. Ebola, earnings miss, potential of rising interest rates, slowing housing markets.... the list goes on an on. However, it is also important to note that this market correction could shape up to be another great opportunity to enter the market at time when others are clearly heading to towards the emergency exit.