After a spike in volatility in Q1 2018, markets had been benign until the beginning of October 2018. But investors' collective nerves have been shaken recently with increased volatility and downward pressure over the past 6 weeks. Should this really worry you?
The S&P 500 index found its high for the calendar year 2018 on 20 September 2018. But investors received quite a bit of a scare over the subsequent 11 weeks and woke up to a level of the S&P 500 index on 7 December which was 10.47% lower than the calendar-year-high from 20 September 2018. Increased investor anxiety together with the most recent news being dominated by Brexit, Canada arresting Huawei CFO Meng Wanzhou and possibly extraditing her to the US on charges of contravening sanctions against Iran thereby increasing the trade tension between the US and China and other headlines of the day tend to shake investor's beliefs in investing in general and in equity markets in particular. As such, in order to get perspective on these topics of the day, we would like to remind our readers about what science has to say on the topic of equity volatility. Spoiler alert: the volatility we have seen in 2018 is nothing special at all when put into historical context. Spoiler alert 2: you should not react emotionally to equity volatility, to market news or any other outside disturbances, since such reactions come to the detriment of long-term investor success. Since we had addressed exactly this very same topic of equity volatility in Q1 2018, allow us to point you to the following blog article. Enjoy the read: https://www.marcikelsconsulting.com/single-post/2018/03/05/What-should-you-make-of-the-most-recent-Q1-2018-Market-Volatility