The stock market has been, and always will be, volatile

Sally Herships Oct 10, 2014
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The stock market has been, and always will be, volatile

Sally Herships Oct 10, 2014
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There are some parts of the stock market you don’t need to be a analyst to understand.

“Markets, I don’t care what market it is, they just don’t go up in a straight line,”  says Scott Wren, a senior equity strategist with Wells Fargo Advisors.

It’s in the nature of markets to give investors a bumpy ride, he says. But this recent ride has been more bumpy than most, and investors have a lot of reasons to be worried. In addition to the bad news from Germany, which Wren says is key, there’s Ebola – and more.

“What’s the Federal Reserve going to do with interest rates; how much is China going to slow?” says Wren.

Quincy Krosby, a financial market strategist at Prudential Financial, says this is how the stock market is supposed to work. 

“You know what, it’s like a GPS system – calculate, recalculate, recalculate yet again,” she says.

She says this time investors are recalculating because of the Federal Reserve’s plan to stop buying bonds, and we might see yet another recalculation when we get more company earnings next week.

“The next big catalyst for this market, potentially, if we get good news, is what companies start telling us,” she says. “Are they seeing demand for their products, are they seeing demand picking up?”

Good numbers could mean the market will come roaring back – or not.  Either way, placing a bet is risky.

“Remember,” says Krosby,  “this isn’t a science. A lot of people think it’s a science – it’s as much an art form as it is a science.”

As for Scott Wren, he’s feeling optimistic, and his bet is that the market will come back. It’s only 4 percent off, he notes, from its all time high. But, he admits, the stock market is a gamble.

If you look at the stock market and try to figure out what’s driving it, it’s usually some combination of fear and greed.”

An earlier version of this article misspelled Quincy Krosby’s last name. The text has been corrected. 

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