Part 1/6:
Market Volatility and Economic Uncertainty
Kevin, a financial analyst and YouTuber, just returned from a house hack board meeting where he was met with questions about the current state of the stock market and the recent spike in the volatility index (VIX) of 21%. He flagged that the Russell 2000 small-cap index is also reflecting distress, being 1.9% below its summer peak and 8.6% below its post-election peak.
The Russell 2000 often serves as a reliable risk barometer, particularly in times of economic uncertainty. Kevin emphasized that such small-cap companies are more vulnerable during downturns since a significant portion does not generate profit or operates at a loss compared to their debt repayments. This precarious balance becomes even more uncertain with looming economic shifts.