The stock market is filled with investing theories, each of which typically falls into one of two types – technical and fundamental. The Elliott Wave Theory is a form of technical analysis invented by Ralph Nelson Elliott in the late 1920s. Elliott believe the market was not chaotic but instead trades in cycles. The makeup of these cycles (or waves) and how they operate forms the basis for Elliott’s theory.
Volatility is a measure of the uncertainty or risk related to changes in the value of a security. High volatility suggests the value of the security will be wider (both positive and negative) and low volatility indicates the value will change at a steadier pace over time.
The recent stock selloff in the U.S., Europe and Asia resulted in all 3 regions giving up their 2018 gains after two days of trading. Hedging only slightly, Tim Anderson, managing director at TJM Investments said, “This is the first time in a while I’d say it feels like borderline panic-type selling.” That near panic, which led to yelling on the floor of the New York Stock Exchange, was something not seen since Brexit vote according to Anderson.
Monday the U.S. dollar traded slightly higher against the euro and the pound. This followed Friday’s news of a pickup in wage growth a possible signal of impending inflation. The inflation fears sent risky assets lower on the implication the Federal Reserve might raise interest rates making borrowing costlier for business.
The 3 main choices people have for investing include hiring a professional financial adviser, using an algorithm-based robo adviser and do-it-yourself. There are arguments for and against all 3 approaches as well as arguments in favor of a hybrid approach that utilizes 2 or 3 systems.