Ah, what exactly does that mean? The summer doldrums is a phenomenon in the stock market where trading volume falls substantially as a result of investor psychology.

The phenomenon refers to the negative impact on market returns due to so many traders and investment pros being absent from their desks during the months of July and August – leading to a huge drop in trading volume, which in turn causes a significant increase in market volatility and sometimes very odd market behaviour when those still in the office are left to react to outrageous news headlines, wrecking havoc on the thinly traded markets.

Look back two years and you’ll see what I’m talking about. The summer of 2011 was impacted by worries over the U.S. debt ceiling. The summer of 2012 brought with it renewed fears of Greece’s collapse and worries of a possible implosion of the eurozone.

And now, just when we thought it was safe to slip away to the cottage, investors have been shaken by renewed volatility in global markets. News of a potential tapering of the Federal Reserve’s bond buying stimulus program sent bond yields soaring in late May and June, with equities giving back some of the strong gains they had made so far this year.

Should investors be concerned? Well, in both 2011 and 2012, markets recovered sharply in the months that followed. As for this summer, the market’s angst over the timing of the tapering of the Fed’s bond purchases, originally thought by many to be as early as September, has caused widespread upheaval for both equity and bond markets recently. However, as RBC Chief Economist Eric Lascelles has maintained since the upheaval began, the conditions the Fed has cited to initiate tapering are likely to take much longer to reach than September.

All of this said, having the confidence that comes from knowing that you have a team of professionals looking out for you, can give you the piece of mind needed to thoroughly enjoy the summer. I have to tell you, I went fly fishing this week for the first time - and apparently, I'm a natural. While we didn’t catch any fish (it was too hot), I found the entire experience very therapeutic and zen. Maybe even zen enough to be my new form of yoga ...

Enjoy the weekend.

D.

Dian Chaaban

Investment & Wealth Advisor

Chaaban Wealth Management Group

416.842.4234