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14 February, 2018

Recent Market Volatility

People get used to anything.  In recent years we have seen a dramatic decrease in the rate of volatility in markets generally - and much like interest rates which are as close to zero as makes no odds (and by some technical measures negative), so smooth calm sailing in global markets has become the 'new normal'.  However despite the global economy being different from times past, and the coordinated efforts of Central Banks being uniquely correlated - some things have not changed, and that's people.

So we, and commentators generally, have been expecting a 'return to normality', and this includes a return to higher levels of volatility in markets.  Now that we have had a few days of 'real' volatility some people have expressed panic at the size of market movements, which in historic terms are really not that significant.  Of course we cannot tell you what comes next, but please read this piece from Dimensional Fund Advisors which examines historic data, and whether remaining invested during volatility provides a better long-term solution for investors than trying to jump in and out to avoid the bumps.

Download the PDF >>>

by John Stirling


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