In their recent value investing panel discussion, Mario Gabelli and John Rogers discussed why volatility is off the charts. Here’s an excerpt from the discussion:
Gabelli: Now what’s going on in the mechanics of the market was your question.
Algos, momos, quants and Robin Hood. We have a generation of traders not investors, speculators. There’s nothing wrong with that as long as they understand the capitalistic system, and as long as they’re willing to allocate capital to public companies and… no other system with all its flaws has been ever created that’s better so, and thank you to John [Rogers] for keeping it honest right.
Rogers: This has been more volatility that I’ve ever seen. I’m sure a lot of you guys are professional investors too and just the day-to-day volatility the hour by hour, you’re up 400, you’re down 400, I’ve just never seen anything like it.
I think it’s because of all these algorithms and what’s going on in the underbelly of our markets, but as Warren always reminds us, volatility should be our friend and just take advantage of those opportunities when stocks are being traded for non-economic reasons, non-cash-flow reasons.
You can watch the entire discussion here:
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