Stock Talk - Volatility Speaks: Investors were Warned. Stock Market Update, Friday January 23, 2026

Episode Date: January 23, 2026

A Key Risk for 2026 emerged quickly. What sparked the sudden market pullback, and how should investors should think about it calmly and clearly? I discuss the impact of renewed tariff tensions, shifting inflation expectations, and why the VIX moved sharply higher, along with what the options and insurance markets may be signaling beneath the surface. Most importantly, I explain why periods of elevated volatility often create opportunity for long-term investors, even when the headlines feel unsettling. This is not about predictions or panic, but about understanding market structure, managing expectations, and staying patient as we move through a fast and emotional start to the year.   📅 Join us live on January 29, 2026, as we unveil our full 2026 Market Outlook with Troy, Charles, and myself. Feel free to send in questions ahead of time if there are specific topics you’d like us to address. https://click2retire.com/Register-1h-2026-mos   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Okay, investors, that didn't take very long. We discussed the likelihood of elevated volatility in the first quarter of 2006 last week. And boom, over the weekend, President Trump's reramping terrorist restrictions in front of his Davos speech and demanding Greenland concessions from Europe caused an explosion in volatility along with the sell-off and long treasury yields on the fear of higher inflation or of greater risk premium for holding U.S. treasuries. Investors is threats to impose 10% tariffs on European nations that don't follow his lead, met with outrage across Europe and the rest of the globe. Here's in Europe played an emergency plan to discuss 109 billion tariffs on U.S. goods.

Less than half a trading day, the S&P 500 wiped out its year-to-date gains for the year. Returning from the long weekend, the S&P 500 fell minus 2.1% Tuesday. It's biggest drop since last October. technology stocks were the biggest losers on the day. Dow Jones lost minus 1.8% and the NASDAQ shed minus 2.4%. As we said in our weekend update to start the year, he's back, referring to the president's history of Thursday afternoon, of weekend tweets and position changes that surfaced in 2018 during his first turn in his second year.

Besides the weekend demands of the president, the markets flipped from complacent to volatile when the investors bracing for the president's speech at the World Economic Forum in DoE. courts expect a decision on the legality of key elements of the Trump trade agenda and announcement of the next Fed Reserve Chairman. Do any of these items materially change the outlook for earnings in the SP 500 over the next three or four quarters? Given the big beautiful bill accelerated depreciation provision, given the tax law changes that should help consumer cash flow with the second quarter, doubtful. But marginally, they do raise concerns about higher inflation and slower growth, which usually translates to lower valuations. The CBOE Volatility Index, that's the VIX index, or the fear gauge of some like to call it,

surge past 20 threshold on January 20th, marking a shift in investor sentiment, with investors' New Year's optimism of Goldilocks colliding the wall of geopolitical and fundamental headwinds. The VIX index closed at 20.6 Tuesday, a nearly 28% jump in a single day. Much as we previewed in our 2006 outlook and highlighted just the prior week, The index signaled a short-term end to the low volatility environment that characterized the second through fourth quarters of last year, post-April's tariff tetrune. The recent spike was caused by an ultimatum from the White House regarding European trade, some negative EPS revisions, and a spike in inflation expectations. The immediate implications of this volatility spike were profound, as the cost of portfolio protection over the next 30 days skyrocketed in the appetite for tech and gross stocks. or burst lower. For the VIX trading above its historical average, many market participants are

now bracing for a period of heightened turbulence and volatility. But I like to compare the VIX index, erst tradable VIX futures. Here's what it looked like a week ago. The data is on the left, the graph on the right. I like to call this shape, steep, but cheap. That is relatively cheap to buy protection for a portfolio for 30 to 45 days. Masters, here's the current shape. As of Tuesday, the 20th's close. This structure is dramatically different than the one just one week ago, as it's now approaching a flat volatility curve where the cost to protect a portfolio for a few weeks or even a few days is the same as it would be for protecting that portfolio for five to six months. We've discussed this dynamic many times the last seven years on stock topic. In simple terms,

we're nearing panic level short-term to protect one's portfolio over the next one to two months. Is panic super high, screaming off the charts, step in and buy all those stocks and assets you think you missed out on the last 10 to 12 months? No investors, not yet. As when that happens, and when investors are forced to buy protection, not just volunteering to buy, the cost of near-term protection can reach a premium to forward costs. A premium has exceeded 25 to 40 percent under times of severe panic and distress. The financial term for this type of structure is backwardization. That's when the near-term protection costs far exceed future cops.

Does this structure make logical sense in the protection markets? Over months or quarters? No, of course not. Why would you spend more to protect your portfolio for only one to four weeks when you can get meaning out of a longer tail protection that lasts three to six months for the exact same cost? The good news is this structure, even though it's approaching flat, still says the same thing to me,

says markets participants are likely to buy the dip if and when forward volatility futures levels cross the 22 level and the front months of the ball curve rise and catch up to that level. The first level looks to be around 6600, 6660, maybe even only 6,700. The insurance markets are the stock markets, the options markets, are hinting that buyers would flood in. Since we never had a parabolic move up, the extended move up in late December, early January, of dropping upwards of minus 10% seem to have declined, not risen. Of course, all this is to be seen over the coming months. Investors, unfortunately, 2006 has started off fast and furious

in a negative way for volatility. This was a risk our investment team had out entering 2006 and when the first video of 2006 was titled, Patience after the Guns and Roses rock ballot. The first half of 2006 is one of those years the options markets. options markets. We're hinting that a real buy-the-dip moment would come later in the first quarter. That pullback has begun, but neither price nor time looks like it's completed. The good news is that our investment team has experience in these types of markets. Remember investors that elevated

volatility also means elevated opportunity for longer-term investors. Historically, investors' biggest incremental returns come for investing when volatility is high, not level, and when markets are and others are acting emotionally, or worse yet, being forced to sell when they should really be pushing their chips into the center of the table and adding to investments. What does this all mean to you? Our advice to you is to keep following our content here at Oak Harvest on our website and our YouTube channels, and we will be addressing our 2006 Market Outlook on January 29th and a YouTube live stream with Troy, Charles, and myself. Send some questions in advance if you want any special. special investment topics addressed. Investors, whether you desire growth or income or a combination

of both in your portfolio, the entire Oak Harvest team is here for our clients doing what we can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to

buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment. investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.