Recs

10

For Stocks, The Fuse Is Lit

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Stocks ended the day roughly flat, with the Dow (INDEX: ^DJI  ) and the broader S&P 500 (INDEX: ^GSPC  )  up just 0.03% and 0.17%, respectively. Note that, despite the fact that Mr. Market finally found his footing after a dismal post-election performance, the VIX Index (INDEX: ^VIX  ) did not retreat. It appears that investors are finally beginning to price the ambient uncertainty somewhat reasonably. (The VIX, which is based on S&P 500 option prices, is an indicator of the market's expectations for short-term stock price volatility.)

The macro view: In the wake of this week's election, the White House and Capitol Hill indicated that the 'fiscal cliff' is firmly on the agenda -- and none too soon -- as both House Speaker John Boehner and President Obama spoke publicly on the topic today. There's not even a blueprint for an agreement yet, but the fact that there appears to be political will to sit down and find a compromise is encouraging. Nevertheless, investors need to be aware that, given the constraints of the Congressional calendar as the year winds down, averting the fiscal cliff will require a determined effort from politicians, and will likely to go down to the wire. Expect the fiscal cliff to be one of, if not the dominant factor, driving a schizophrenic 'risk-on/ risk-off' market through the end of the year.

Naturally, some stocks are more exposed to this type of political risk than others. I happen to think the fiscal cliff poses an existential tail risk for mREITs that depend heavily on wholesale financing, including Annaly Capital Management (NYSE: NLY  ) . If you're looking for a comprehensive assessment of Annaly's risks -- and its upside -- click here to receive the Fool's premium report on the shares, which includes 12 months worth of updates.


Read/Post Comments (1) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 10, 2012, at 9:09 AM, thogshead wrote:

    About "despite the fact that Mr. Market finally found his footing after a dismal post-election performance, the VIX Index (INDEX: ^VIX) did not retreat." if anyone is interested knowing how and when VIX volatility will change, Volatility Research has come up with a pretty good way to predict VIX “fear guage”

    volatility using NYSE VXX:

    http://www.sites.google.com/site/VolatilityResearch/

    The klinker in this market-woodpile is VIX volatility, and this 11-month rally may have been a house-of-cards.

    We’re in the lull before the Perfect Volatility Storm.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2105913, ~/Articles/ArticleHandler.aspx, 8/3/2015 11:41:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Alex Dumortier
TMFAleph1

Alex Dumortier covers daily market activity from a contrarian, value-oriented perspective. He has been writing for the Motley Fool since 2006.

Today's Market

updated 2 hours ago Sponsored by:
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASD 5,115.38 -12.90 -0.25%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/3/2015 4:04 PM
NLY $10.02 Up +0.07 +0.70%
Annaly Capital Man… CAPS Rating: ****

Advertisement