Contact Us

Client Login

Account Login

By clicking the login button below you are leaving the Doyle Wealth Management site and being redirected to the TD Ameritrade Institutional login page.

close

Perspective

Perspective on Recent Market Volatility

Global markets have swung wildly in recent days, and it should serve as a good remind that markets do not go up uninterrupted forever. Here is a simple recap of the month of August: The beginning of August saw the S&P 500 at 2,104. It fell to 1,868 on August 25th, (-11.2%), only to recover to 1,972 (+6.5%) on Monday's close. for the month, the S&P 500 was down 6.3% - the larges single month decline since May 2012. that is the perfect definition of volatility. I contend the recent volatility is normal and to be expected. The market's lack of volatility over the past four years is not normal and should not be expected to return.

Historical Volatility

Over 1,000 trading days have passed since the last correction of 2011 and the one in which we are presently. Normally, corrections occur about once a year with an average decline of 14%. With the market having gone nearly four years without such a decline, it is understandable why some investors may have been caught off-guard.

Investors should understand volatility and embrace it. volatility is part of the risk premium long-term investors must accept in order to achieve market returns superior to bonds and inflation. As I have written several times in the past, those who are harmed by corrections and bear markets, are those who are surprised by such markets. Don't be surprised; rather, be prepared.

Be Prepared

Being prepared is understanding market corrections are nothing more than a normal part of investing for the long-term.  Corrections are to be expected and need to be accepted in order to succeed as an investor. Being prepared also means understanding your asset allocation and your tolerance for risk. Asset allocation is the mix of assets in your portfolio - often including more volatile assets such as growth investments and more stable investments such as fixed income assets. this asset mix is often driven by where an investor may fall on the risk spectrum from conservative to aggressive. The mix is also influenced by investors' financial risk tolerance and their emotional or behavioral tolerance for risk.

Too many investors often use a rear-view mirror to adapt their portfolio and make investment decisions - too many investors focus on past performance as an indicator of future performance. This is fraught with risk and should be avoided. The best use of that mirror is to turn it on yourself to truthfully gauge your own circumstances - what your true tolerance for risk may be and what investment objectives you need to achieve.

Roots of the Market Selloff

  • China's economic slowdown and its devaluation of its currency
  • Uncertainty regarding the Federal Reserve's impending interest rate move
  • Falling commodity prices
  • The lack of a correction in over four years
  • Narrowed market leadership - a weak technical indicator

Going Forward

  • We do not believe the recent volatility in global markets and falling commodity prices is a sign of an impending global recession.
  • The Federal Reserve may be less likely to raise interest rates at its September meeting as a result of recent events.
  • Investors should stick with their long-term plan and remain focused on their goals and objectives. Short=-term market movements should not derail a sound long-term strategy.

At Doyle Wealth Management, we are here to answer your questions and provide insight and direction. We advise all investors to tune out the noise and remove emotions from investing. Scrutinize and restrict your news intake. Understand that the 24/7 news media is not your friend. Its primary purpose is to sell advertising, not to provide sound, balanced information about the markets.

Please feel free to reach out to any of us with your questions. 

Read Full Post >

All Posts

Our Team

McLean A. Baran

Support Adviser

We are strictly fee-only advisors; we have no biases. We are free to focus solely on the financial needs of our clients.

All Team Members

FAQs

What are the benefits of working with a Registered Investment Advisor?

A significant part of your financial planning strategy is finding the right people to help you achieve your investment goals. There are plenty of professionals in the financial services industry today, but working with people that are Registered Investment Advisors offers specific benefits. First, Registered Investment Advisors are held to a “fiduciary standard.” Next, RIAs provide advice based on your unique situation. Whether you need help with retirement planning, a tax situation, estate planning, or managing assets at multiple places, it’s fundamentally important that your advisor truly understands you, your goals, and your situation. Additionally, RIAs typically charge fees based on a percentage of assets that they manage for you. This fee structure is simple, transparent, and easy to understand.

Read Full FAQ

All FAQs

Independent & Objective Advice

Personal | Trusted | Experienced

  • Doyle Wealth Management is a privately owned, independent advisor unaffiliated with any bank or broker-dealer, making us free from the conflicts of interest in larger organizations.
  • Since we are strictly fee-only advisors, we have no biases. We don’t sell insurance, annuities, or any other financial product. We are free to focus solely on the financial needs of our clients.
  • We do our own work, believe in our own research and act on our own ideas. Our steady approach is guided by our belief in fundamentals over fads.​
Share