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Want to know what Volatility looks like?


How quickly we forget...lest 2008 remind you of what volatility really looks like. We have been placated into a false sense of security for almost 10 years. Historically low interest rates, cheap money and financial engineering have masked several "real" problems. We have seen several corrections since 2009, but since October of this year, the markets are beginning to behave as they should. I remember measuring how many days that included a 1% swing (from the daily highs/lows) and it was very muted. Not anymore. Be prepared to see these types of moves more regularly, for a longer period of time. Why? The Federal Reserve has reversed course, tightening its reigns, raising interest rates and shrinking their balance sheet of loans. Political uncertainty is increasing, especially around the topic of trade. Finally, earnings growth is slowing. Throw these 3 factors into a pot that is almost 10 years out from the last recession, and its the perfect recipe for hypersensitivity. Don't get so caught up in the day-to-day movements of the markets...I do enough of that for both of us. Zoom out. Look at the complexion of the marketplace, the relative value of different securities and the forecast for the future. This will give you the proper perspective and lend to a good conversation about how much risk you really want to take moving into 2019 and beyond, because I believe volatility is here to stay.