April 23, 2021
Good morning,
Jeez, the market is taking this rise in volatility thing quite seriously. Just this week; Mon/Tues – swift 1.6% decline. Wed/Thu (until 1:06pm ET) – swift rally completely recapturing early week losses, right up until the tax increase headline at 1:06pm ET. Then the market dropped over 1% in less than 1min of trading. The market opens this morning off 1.2% for the week.
And what about that tax thing? From a market perspective, the good news is that higher capital-gains taxes haven’t killed stock market rallies in the past. For example, 1987 began with a capital-gains tax increase, which was followed by an epic rally and then the October crash. In 2008, markets slipped steadily for months after the tax was cut, before crashing amid the crisis. History shows that the tax isn’t terribly fundamental to the overall level of the market.
Despite the churn, there been no tape damage this week – we stay the course while reaching for the antacid. Have a good weekend.