Perspective on Recent Market Volatility

In recent days, the increase in volatility in the stock market has resulted in renewed anxiety for many investors. While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself.

What should you make of recent ups and downs in the stock market? Here’s helpful context on volatility and expected returns.

How Does Your Money Manager Choose?: Evaluating Your Asset Allocations

Take out A piece of paper and draw a circle on it. This circle represents all of the significant public companies traded on the New York Stock Exchange.

Now draw a horizontal line through the middle of it

The upper half of the circle represents 100% of the largest companies in the total market. The bottom half of the circle is all of the smallest companies.

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