Making Sense of Volatility

Making Sense of Volatility

We are pleased to share a short video with you that will serve as a refresher about preparing yourself for volatility as an investor.

The past four months of market performance have served as an excellent reminder of what volatility feels like and how our society reacts to market fluctuations. In December, Canadian and US stock indexes were down anywhere between 6 and 10% for the month. The media was notably pessimistic in December and you could easily read countless explanations for why stocks were negative and why many predicted it was only going to get worse from there. However, so far in 2019 we have seen stock prices quickly move back in a positive direction and post strong gains, recouping most of their losses from the 4th quarter of 2018. This should serve as a reminder that nobody can reliably predict where markets are going at any given time. There are simply too many factors that drive stock prices, only a fraction of which show up in media and research reports. For this reason, it is interesting that in more volatile times, commentators (the media) and investors alike, seemingly become more confident for no apparent reason. You might have heard a friend or work colleague say something like this recently, “This market is definitely going lower, I can feel it.” The fact is, they really have no idea. The point of this is that if you are invested in stocks, volatility is inescapable. In fact, volatility often presents us with our best opportunities to make money long-term. It is by no means pleasant to go through volatility and to watch your portfolio go up and down in value, but it is part of the process of being an investor. We think today’s video will help remind you about why staying committed to your investment plan is often the best course of action during volatility.

As always, if you have any questions, please don’t hesitate to get in touch.