Market Volatility - Hazard or Opportunity?
Volatility has returned to the equity markets over the past month. The S&P 500 experienced a 10% drawdown in February, retraced this entire loss and moved back into positive territory for the year, and took another leg down last week. Year to date, the S&P is down just under 4% - barely a ripple in the big picture. Still, investor sentiment has turned more cautious.
One indication of this change in investors’ appetite for risk is the VIX, an index of volatility, or the magnitude of expected movement of stock prices. The VIX stands at just under 25, up from historical lows of under 10 at various points in 2017. Of course, there are many factors, including both objective measures and psychological considerations, that drive equity prices, and that is a subject to which we devote deep thought. But volatility is a fascinating topic in its own right.
Hazard or Opportunity? It Depends..
Volatility can be concerning, even frightening, to investors who are uneducated or unprepared, or whose portfolios are too risky. But volatility creates opportunity for investors whose portfolios are strategically designed and properly diversified. Our long term, strategic approach includes broad diversification, both within equities and to other asset classes, such as fixed income, alternative investments, and even cash.
We don’t know whether the resurgent equity market volatility will continue or deepen, but we are ready to assist our investors not only in coping with it, but in taking advantage of it. Please call us at (516) 487 – 8220 to discuss.