Market Turmoil: What Should Investors Do Now?

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(List compiled by Eben Esterhuizen, CFA. Price and insider data sourced from Yahoo! Finance)

The Dow dropped 500 points at one point on Thursday, bringing concerned investors to ask the age old question: "What do I do now?"

Stephen Roach of The Big Picture says that's the wrong question. What investors should be asking is "What have I already done to prepare for today?" And more to the point: "What can do I do to prevent it from happening again?"

The problem with investors today, he argues, is the tendency to jump to action whenever a news story breaks. Following every tremor in the market will drive anyone crazy. Instead, he suggests that with a bit of planning you could be all set to weather some of the most unsettling economic storms...

"What you can do is anticipate events that are cyclical in nature. These major shudders repeat every few years, so we should not be surprised by them. Construct a plan that allows you to ride out these events without panic or forced errors. You need a plan that anticipates these regular occurrences."

As Ritholtz points out, when it comes to investing it's best to be proactive instead of reactive. So how can you protect yourself from unexpected, insane market volatility?

To help you find ideas, we crunched the numbers, and identified a list of stocks that have a positive correlation with the VIX index (a.k.a. the market's "fear gauge").

In other words, these stocks tend to see gains when market volatility, i.e. uncertainty, increases. They can provide a good hedge if you're worried about extreme market swings.

To further refine the quality of the screen, we only focused on companies that have seen significant insider buying over the last six months.

Insiders seem to think these stocks will continue to be protected from market volatility--what do you think? Of course, past performance is no guarantee of future results, so only use this list as a starting point for your own research.

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List sorted alphabetically.

1. Acorn Energy, Inc. (ACFN): Provides energy infrastructure management solutions worldwide. Correlation to the VIX index over the last 60 days stands at 0.646. Over the last six months, insiders were net buyers of 59,965 shares, which represents about 0.42% of the company's 14.26M share float.

2. Akorn, Inc. (AKRX): Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Correlation to the VIX index over the last 60 days stands at 0.591. Over the last six months, insiders were net buyers of 33,500 shares, which represents about 0.05% of the company's 67.56M share float.

3. Access National Corp. (ANCX): Operates as the bank holding company for Access National Bank that provides commercial credit, deposit, and mortgage services to middle market businesses and associated professionals primarily in the greater Washington, D. Correlation to the VIX index over the last 60 days stands at 0.623. Over the last six months, insiders were net buyers of 23,825 shares, which represents about 0.39% of the company's 6.16M share float.

4. APAC Customer Services Inc. (APAC): Provides customer care outsourcing solutions and business process outsourcing (BPO) services worldwide. Correlation to the VIX index over the last 60 days stands at 0.515. Over the last six months, insiders were net buyers of 45,000 shares, which represents about 0.16% of the company's 28.99M share float.

5. Constellation Energy Partners LLC (CEP): Engages in the acquisition, development, and production of oil and natural gas properties, as well as related midstream assets. Correlation to the VIX index over the last 60 days stands at 0.561. Over the last six months, insiders were net buyers of 19,501 shares, which represents about 0.12% of the company's 16.22M share float.

6. Parkervision Inc. (PRKR): Engages in the design, development, and sale of proprietary radio frequency (RF) technologies and products for use in semiconductor circuits for wireless communication products. Correlation to the VIX index over the last 60 days stands at 0.51. Over the last six months, insiders were net buyers of 87,800 shares, which represents about 0.17% of the company's 52.90M share float.

7. Rex Energy Corporation (REXX): Operates as an independent oil and gas company in the Appalachian, Illinois, and Denver-Julesburg Basins. Correlation to the VIX index over the last 60 days stands at 0.512. Over the last six months, insiders were net buyers of 77,325 shares, which represents about 0.22% of the company's 35.04M share float.

8. RTI Biologics, Inc. (RTIX): RTI Biologics, Inc. and its subsidiaries produce orthopedic and other surgical implants that repair and promote the natural healing of human bone and other human tissues, and improve surgical outcomes. Correlation to the VIX index over the last 60 days stands at 0.658. Over the last six months, insiders were net buyers of 16,000 shares, which represents about 0.03% of the company's 51.87M share float.

9. White River Capital Inc (RVR): Engages in specialized indirect auto finance business. Correlation to the VIX index over the last 60 days stands at 0.569. Over the last six months, insiders were net buyers of 6,214 shares, which represents about 0.24% of the company's 2.63M share float.

10. STAAR Surgical Company (STAA): Designs, develops, manufactures, and sells implantable lenses for the cataracts and refractive surgery. Correlation to the VIX index over the last 60 days stands at 0.671. Over the last six months, insiders were net buyers of 11,927 shares, which represents about 0.05% of the company's 25.00M share float.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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