JU finance professor breaks down 3 reasons for market volatility

Stock market on roller coaster this year

JACKSONVILLE, Fla. – Amusement parks in Central Florida will claim they have the best roller coasters, but investors have been taking some wild rides this year.

The latest example is this week, with a big loss Monday followed by a big gain the next day.

On Tuesday, the Dow Jones industrial surged 389.17 points, or 1.6 percent, to 24,033.36. It fell 458.92 points a day earlier.

News4Jax asked a local expert to make sense of the roller coaster of up and downs on Wall Street, and spoke with an award-winning professor of finance at Jacksonville University.

"I think to answer this question, you have to understand what are other drivers of this volatility, right?" said Abdel Missa, resource professor of finance at JU. "How did we even get here?"

Missa is the founder and chief investment officer of global investment firm Market Cipher Partners, and also coaches JU students in managing the student investment fund. 

He explains that there was a market euphoria following the tax reform plan, which led to an over-bought market.

Then, Missa said, there were three catalysts for the volatility:

  • A report about inflation worried people, when wage growth climbed to nearly 3 percent. That report later pulled back the concerns.
  • The report of a coming trade war with China over tariffs imposed by President Donald Trump’s administration. In his opinion, Missa said, it’s more negotiations than “war."
  • The recent technology concerns, such as the Facebook data controversy,
  • Missa said don’t turn a blind eye, but don’t panic.

     "Right now, the market is trading based on headlines," he said. "It's a headline-driven market."

    Missa added that it's also an emotionally driven market.

    "Whenever it's emotional, it's better to stay calm and stay composed, and then try to, basically, close your eyes and two months ahead, three months ahead, what's going to happen?" Missa said. "That's what I would advise investors to do. I think it's time to be very composed and, potentially, it's a good buying opportunity today."

    Missa believes there is a good chance that the trade negotiations on tariffs will lead to a win-win outcome. He said he is not worried about the so-called trade war.

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