Don’t Be Fooled by Low Volatility

Don’t Be Fooled by Low Volatility

June 04, 2024

Investors know that the stock market moves in cycles, but the cycle has seen no daily drops of more than 2 percent for over a year.

As the accompanying chart shows, the 2023-2024 stretch of low volatility ranks 9th since 1966. Is that cause for alarm? No. Concern? Maybe, but only if you let emotions drive your decision-making.

There’s no reason to suggest that a 2 percent move is pending. The table shows the stock market has a long way to go before it sets any records.

But the table also reminds us that the stock market has trended higher while managing through domestic economic uncertainty and unsettling international news. History suggests that it may be only a matter of time before we see a 2 percent daily drop.

When we created your portfolio, we anticipated there would be periods of market volatility. While none have occurred, you base your portfolio on your goals, time horizon, and risk tolerance. We’re ready for what comes next.