3 things to remember about market volatility
After a period of relative calm over 2012-2014 volatility has spiked over the last year as worries about the global growth outlook intensified. With this renewed volatility a desire for safety has naturally come. It’s hard to put the recent volatility down to a move into the boom/bust phase of the cycle because there is little evidence to support it. Global growth is far from booming, inflation is low, debt growth is low, shares are not overvalued, investors are not complacent and monetary policy is far from tight. These considerations suggest that we aren't on our way to a re-run of the sort of volatility seen around the global financial crisis. During volatile times the key is to avoid the emotional investing driving the crowd, look for the opportunities that volatility provides and stick to a long-term investment strategy. In this video, we consider the role of cycles, compound interest, and noise when comes to managing volatility.
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