Volatility in the Market

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

Since the start of the fourth quarter, volatility has become the new normal in the market.  According to The Wall Street Journal (WSJ)*, over the past month the Dow Jones Industrial Average (Dow) has averaged a 600-point intraday swing, with that swing never going below 200 points on any given day. Volatility has a tendency to beget volatility, so the main thing that investors can count on now is that volatility will likely stay in the market.

The two charts below, provided by the Carson Group Partners demonstrate the volatility in the market. The first chart shows the S&P 500 (S&P) either going up or down by at least 1% each day. In the fourth quarter of 2018 there were 28 such days, well above the average of 20 per quarter.

The second chart shows the weekly returns of the S&P. After a quiet 2017 (and most of 2018), volatility has risen steadily since the start of the fourth quarter and continuing into the New Year and often the losing days are sandwiched next to the winning days. According the WSJ, “Take the day after Christmas, which saw the biggest ever point gain in the Dow Jones Industrial Average. The 1,086-point bounce followed a four-day preholiday stretch that erased nearly 1,900 points from the index.”

 

You may be wondering, what does this mean for my accounts? Should I reallocate to my portfolio into bonds or safe alternatives?  The volatility can make even the most seasoned investors nervous. But, it generally makes sense to stick with your financial plan.  According to Putnam Investments*, over the last 15 years, an investor could have tripled their investment by buying and holding the S&P. An initial investment of $10,000 would have grown to $30,000.  But missing just the ten best days slashed that amount in half and missing the twenty best days eliminated all of the gains. In other words, just one half ½% of the trading days made all of the profits from owning stocks during a 15 year period. While the volatility may be unsettling at times, the idea is to generally stay with your plan and to look for opportunities when they present themselves.  Call us with questions.

 

*Source: A Constant: There will be Volatility- written by Spencer Jakab, Published by The Wall Street Journal. January 5th/6th 2019.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

5 Things To Know Now That The Bear Is Here

Dear Friends, It finally happened. On Monday, June 13th, the S&P 500 Index moved into a bear market, finally closing 20% beneath the January 3 high. And then last week, the S&P 500 Index rebounded 6.46%, to bring the year-to-date return to -17.3%.   Here are 5 things to know ab …

Will There Be A June Swoon? Maybe, But Maybe Not

Dear Friends, After a late-month rally, we can say goodbye to the month of May, which now opens the door to June. Here’s the bad news, June is historically a weak month and it is actually the worst month of the year during a midterm year, down 1.8% on average. The good news though is …

Tips to Help You Stay Strong During Market Volatility

It’s almost impossible not to feel anxious at the dips and dives the stock market has been taking recently, compounded by relentless inflation-focused headlines. That’s why you might be surprised to learn there’s a lot of positive news to be had, despite the market uncertainty. 
1 2 3 210 211 212

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation