Volatility Study

| April 12, 2018
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According to PGIM, you should: Stick To Your Allocation During Times of Volatility.

I have been telling you that, but they have some data!

PGIM evaluated a 68-year time period with 26 volatility spikes and 25 post-peak events.

According to PGIM’s research, equity performance during a volatility spike event is negative. On average, the loss on the Standard & Poor’s 500 stock index is 8.2 percent over two months. But the markets recover to pre-spike levels seven months later.

In fixed income, U.S. high yield and investment grade credit lose 9.2 percent and 3.3 percent, respectively, during the two months. Both credit asset classes recover nine months later.

Investors can benefit from better returns after markets have quieted, the PGIM researchers found. For the 21 months before a bout of volatility, the average return for the S&P 500 was 20.3 percent. For the 21 months afterward, the return was 26.7 percent.

Two caveats for those of us on the ground dealing with emotions and actual portfolios:

  1. This is geared towards your long-term assets and not any immediate cash needs.
  2. If you can’t sleep at night, you must immediately take action and review your financial plan and investment portfolio with your advisor.

Avoiding impulsive, emotionally-charge investment decisions are hazardous to your portfolio.

 

Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O

 

Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Meyer Capital Group), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Meyer Capital Group. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Meyer Capital Group is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Meyer Capital Group’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

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