A few weeks ago all of the brokers and market makers were coming to the confessional claiming that their earnings were down as a result of reduced trading and volatility in the stock market. Well, the last few weeks should have been quite a relief from the drought for Schwab
The most popular gauge for market volatility is the VIX, which measures the implied volatility of the Standard & Poor's 100 companies' puts and calls. But it's not the largest companies on the market where things have obviously heated up -- it's the little guys. Everyone's looking for "the next Taser"
Over the last few weeks, we've seen some companies that have moved 40, 50, 60% or more in a single day, sometimes on no news or on news of marginal importance. Tuesday, Mace
But Mace isn't alone. Travelzoo
Whereas the big movers on the markets had generally been in the 9-12% range over the last several months, routinely each day you'll find companies moving several times that amount. Wednesday, for example, aaiPharma
There is really nothing fundamental that suggests most of these violent moves are appropriate. The last time we saw an extended period of time where the most speculative companies on the market acted like this was just before the meltdown happened in 2000.
All I'm saying is that if the big moves up and down give you the impression that there is easy money floating around out there, put it out of your head. This is rank speculation, plain and simple, and a great number of people who feel pretty smart at this moment are going to get mauled when the carousel stops.
Bill Mann owns none of the companies mentioned in this story. He does think that the brokers are a little interesting, though. For true hidden gems, not traders' playthings, consider a free trial to the Motley Fool's Hidden Gems newsletter .
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