So far, as dramatic as the moves seem to be, they aren’t much. They only look extreme compared to the unusually placid preceding period. This volatility is more normal than not. Obviously, quick moves that seem to happen in a matter of seconds point to structural changes that have happened to markets with the advent of advanced technology. Computer driven algorithms, high frequency trading and other types of strategies can create blinding moves and changes in direction.

All of this is simply noise to a long-term investor.

These price moves provide no information about the success of a business or its strategies. If a company, through its efforts, can increase its earnings substantially over time, it will be worth more and that value will be recognized. This is the most important thing to keep in mind; not the day to day or even inter-daily swings in trading activity. Just now, investor sensitivities are heightened with many extrapolating the most negative scenario to unrealistic or even absurd lengths. This too will pass. We are seeking and taking advantage of opportunities.

Stay steady, my friends, and prosper.

El Solo Toro