Click on the link below the access the chart.
As illustrated in the attached chart, the stock market, by its very nature, is volatile. Over the past 70 years you can see that it is very normal for the market to experience periods of turbulence.
The intra-year decline this year in the S&P 500 has been 10% (highest the market has been within the year to the lowest point of the year). That tells us that we have not yet reached the average level of fluctuation which is 13.4%. The last several years saw much lower levels of price swings in the stock markets and we have become accustomed to it. As a client said to me this morning, “The markets are acting wonky.” I replied, “Not really. They are actually quite normal.”
If you listen to the best money managers in the world they will all tell you that you must learn to embrace volatility. That the sometimes violent price swings lead to the necessary entry prices required in order for us to make above average returns over time.
Our team has been expecting this for some time and we have your portfolios properly positioned for this phase of the markets, leaning to defense and holding higher levels of cash and bonds.
As outlined in the chart, volatility is normal and should be expected. Understanding price swings can benefit you over time - if you manage thru them appropriately - and are essential for doing well with your investments over the long term.
Call or email if you have any questions.
Allan