Understanding recent market volatility When you fill a room full of advisors and fund managers, it doesn’t take long for people to start talking about the recent market volatility.

Some there were saying they were getting phone calls from clients worried about their investments.

So how bad was this crash? Well, from 08 September to 16 October, the MSCI World Index fell by -8.04%. But the markets have since recovered and if you had invested, you would be back in positive territory.

While people were talking about worried clients, I asked myself:

  1. Why are clients invested in a portfolio that they start getting worried over ups and downs over a few weeks? Isn’t this was equity markets do? They don’t go in a straight line like we’d like them to.
  2. Why the need to look at markets all the time?

Those who look at their portfolios on a monthly basis, will only see it rising 32% of the time. Someone who only looks at it once a year, sees the exact same portfolio rising 64% of the time. One thinks his portfolio is rubbish and worries about it constantly, the other thinks it’s great as it is rising most of the time.

Investing is a long term strategy to increase your wealth. There will be ups and downs during that time. That is why it is so important to get it right at the outset. Understand the potential downside to any investment strategy and pick one that you are comfortable with.

Steven Barrett is the Managing Director of Bluewater Financial Planning. He can be contacted at 01 485 3305 or at steven@bluewaterfp.ie