Views on Volatility

Views on Volatility

February 01, 2021



It has been said that people often see different things even though they are watching the same event.  That seems to have been the case last week when share prices of several companies experienced tremendous volatility.


Some cast the events as a David vs. Goliath morality tale.  However, Michael Mackenzie of Financial Times saw it differently. He wrote, “…a speculative surge from retail investors using borrowed money…has in the past signaled a frothy market top.”  (In financial lingo, a market is ‘frothy’ when investors drive asset prices higher while ignoring underlying fundamentals.)


No matter how you characterize it, the events of last week were unusual.  Felix Salmon of Axios explained, “Almost never does a stock trade more than twice its market value in a single day…It has happened seven times this week already, and 20 times this month…What we've seen in the past month, and especially the past week, is certain companies becoming little more than vehicles for short-term gambling.”


While the social-media-driven trading spectacle was fascinating, it overshadowed other substantive news that may affect more companies over a longer period of time:


  • The Federal Reserve left interest rates unchanged near zero. Fed Chair, Jerome Powell, indicated rates will remain low until jobs have recovered, even if inflation moves beyond the Fed’s target rate, reported Joy Wiltermuth and Andrea Riquier of MarketWatch.


  • The economy continued to grow during the fourth quarter of 2020. The Bureau of Economic Analysis reported gross domestic product (GDP), which is the value of all goods and services produced, increased from the third to the fourth quarter of 2020.  The pace of growth slowed significantly from the third quarter as the coronavirus continued to interfere with economic activity.


  • A highly anticipated vaccine proved less effective than anticipated. Markets responded negatively to the news that a single-shot vaccine was 66 percent effective globally.  The value of the vaccine is greater than the statistic suggests, according to experts cited by Ben Levisohn of Barron’s. The shot, “…prevented severe symptoms in 85 percent of patients, meaning that even those who caught the virus had cough, sniffles, and fevers but avoided the worst outcomes…”


  • Company earnings in the fourth quarter were better-than-expected. On Friday, John Butters of FactSet wrote, “Overall, 37 percent of the companies in the S&P 500 have reported actual results for Q4 2020 to date.  Of these companies, 82 percent have reported actual EPS [earnings-per-share] above estimates…”


Last week, major U.S. stock market indices finished lower.


Data as of 1/29/21







Standard & Poor's 500 (Domestic Stocks)







Dow Jones Global ex-U.S.







10-year Treasury Note (Yield Only)







Gold (per ounce)







Bloomberg Commodity Index







S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.  Sources: Yahoo! Finance, MarketWatch,, London Bullion Market Association.  Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.




In January, the Merriam-Webster Dictionary added 520 words to its pages.  The additions included new words that have found their way into common use, as well as expanded definitions for words that were already well-established.  Here is a sampling of the new entries:


  • Hygge: A cozy quality that makes a person feel content and comfortable.


  • Pod: A small group of people who interact closely while minimizing outside contact to avoid exposure to a contagious disease.


  • Hard pass: A firm refusal or rejection.


  • Cancel culture: The practice of engaging in mass canceling as a way of expressing disapproval and applying social pressure.


  • Crowdfunding: Obtaining needed funding by asking a large number of people, usually members of an online community, for contributions.


  • Gig worker: A person who works temporary jobs as an independent contractor or freelancer.


  • Second gentleman: The husband or male partner of a vice president or second in command of a country or jurisdiction.


As new words become common or expand their meanings, other words become obsolete.  What are some words that explained the world when you were younger and have fallen out of use?  Britches, floppy disk, icebox and yuppie come to mind.





“For last year's words belong to last year's language. 

And next year's words await another voice.”

--T.S. Eliot, poet, editor, playwright



Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Treiberg Wealth Management, a registered investment advisor and separate entity from LPL Financial. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.  The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association. The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This newsletter was prepared by PEAK. Past performance.