Market volatility: breathe deeply and don’t do a thing


Given the recent increase in market volatility, we thought you might find the article below to be helpful. If you’ve been a client or friend of The Advisory Group for a while, the timeless themes will sound familiar to some of our past conversations, letters, webinars, and blog / Facebook / Twitter posts (follow us!).

It isn’t surprising that a “market correction” of some sort would occur eventually. If you’ve attended our Quarterly Context webinars, we’ve commented for a while about markets being somewhat richly valued at the tail-end of an extended post-Global-Financial-Crisis bull market, partly fueled by low/stimulative interest rates. With concerns about the now large and less than transparent Chinese economy, and the implications for the global economy, uncertainty has caused markets to pull back.

No one can predict when or how long market adjustments will last, and studies show that market timing almost always leads to worse results than staying the course. For that reason, we help prepare for volatility long before it happens, by helping clients understand risks (including inflation, which is much worse in the long-run), identifying portfolios that meet their evolving planning needs and risk tolerance, and we rebalance portfolios to reduce excess risk.

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