When the VIX gets this high I look to cover some hedges, says Metropolitan Capital’s Karen Finerman

Key Concepts:

• Mag Seven: Refers to a group of seven prominent technology stocks.
• VIX (Volatility Index): A real-time market index representing the market's expectations for volatility over the coming 30 days.
• Hedges: Investments made to reduce the risk of adverse price movements in an asset.
• Balance Sheets: A financial statement that reports a company's assets, liabilities, and equity at a specific point in time.
• Moats: A company's sustainable competitive advantages that protect it from competitors.

Market Turmoil and Trading Strategy

Karen Finerman acknowledges the challenges posed by the recent market sell-off, particularly its impact on the "Mag Seven" stocks, which are down more than 30% from their 52-week high. She jokingly states that medication might be the best way to handle it, highlighting the difficulty for those with a long investment strategy.

VIX as a Trigger for Hedging

Finerman emphasizes the importance of the VIX (Volatility Index) as an indicator. She notes the "extraordinary" movement in the VIX and explains that when the VIX spikes to high levels, she looks to cover some hedges, effectively increasing her long exposure. This suggests a contrarian approach, buying when volatility is high.

Focus on Strong Balance Sheets and Moats

Finerman stresses the importance of owning companies with "great balance sheets." She mentions that Meta and Amazon are significant positions in her portfolio, with Amazon being her second-largest holding. She expresses comfort in staying invested in these companies due to their financial strength and business moats.

Rejection of Market Timing

Finerman explicitly states, "It is not my strategy to try to time the market." She believes it's "almost impossible" to time the market successfully. Instead, she focuses on owning businesses she's comfortable with, characterized by strong balance sheets and competitive advantages.

Notable Quotes:

• "I think medicated might be the best answer." - Karen Finerman, on handling market turmoil.
• "It is not my strategy to try to time the market. I have no ability to do that and I think it's almost impossible to do so." - Karen Finerman, explaining her investment philosophy.

Synthesis/Conclusion:

Karen Finerman's strategy during market turmoil involves monitoring the VIX, covering hedges when volatility spikes, and focusing on companies with strong balance sheets and moats, like Meta and Amazon. She explicitly rejects market timing as a viable strategy, emphasizing the importance of long-term investment in fundamentally sound businesses.