Market volatility is back in vogue. We were just beginning to find comfort in the calm when instability returned. It is often difficult to discern the differences between “noise” and true fundamental shifts that would warrant large price moves in the major stock indexes in a single day. A war in the Korea’s – that is big news and a potential game changer as it relates to risk and return for common stocks. The president of North Korea just rattling his saber again? No new news there. Needless to say, in all of our collective careers at Sigma, there have been relatively few (count on one hand) true game changer events. President Reagan exhorting the Russians to tear down the Berlin Wall was a game changer as it unleashed the “peace dividend” that ushered in the bull market from 1992 until 2000. We recognize that the tumult in Europe is real, and the risks in the Korea’s are real, but we are not convinced that the world changed enough on 5/27/10 to warrant a 3% move in the major averages.
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