This week we’d like to revisit our previously published educational piece discussing the noise of short-term volatility. Given the current market environment, the subjective nature of coping with the volatility may be to exit equity holdings. Although it’s hard to imagine in the very short-term, the notion of maintaining, or even increasing, equity market participation may be the best solution to amplifying the possibility of long-term success. We strongly believe that downside market volatility can offer tremendous opportunity for a couple of reasons. Firstly, the concept that equities have lost value means that they’re now on sale relative to a pre-determined historical period. Such an event tends to entice sideline cash across large institutions, and companies, to be put to use for long-term use. As that materializes, the upbeat nature of market participation, and therefore sentiment, has the ability to push markets higher. The second reason we believe this is a tremendous opportunity for retail clients is because they have the ability to increase their equity market participation by funding it with the sale of perceived safer assets, such as bonds and cash. For those investors that maintain a life expectancy of 10+ years, which encompasses the overwhelming majority of individuals, then buying equity risk assets at such a discount can have a tremendous long-term benefit to total investment performance. Market direction can change on a whim. Remaining objective and continuously adjusting your global equity market participation can make a world of difference over the next 5-10 years.
Investment Policy Committee:
Investment advice offered through CX Institutional, a registered investment advisor.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted.