Market Volatility

00:00:05
Hello, welcome to cornerstone clips. Today I’ll be talking about market volatility. Sounds like a fun subject, doesn’t it? Well, I think often people get pretty emotional about market. Volatility and that’s why we want to address it.
00:00:23
We could get real technical and we could talk about standard deviation in different ways. You measure market volatility, but I really don’t believe that that’s what matters standard deviation would would help us understand the variance in price of a particular investment instrument. But what we like to remind our clients.
00:00:43
Is market volatility can be your friend. It creates opportunities. It’s not something that you need to be scared of. It’s something you need to understand. It’s just the reality. You can get a very simple investment.
00:01:00
Money market CD, something that has no volatility, but generally you never stay ahead of inflation that way to beat inflation and to earn good returns, you have to use investments that have some market pricing and are going to go up and down on you. Generally, in in a common year in an average year you’ll see the two to three 5% pullbacks, not untypical. To see one of those go over 10%. And so we try to tell our clients that that you will experience these things and those years I’m discussing where you see these 5 to 10% pullbacks are still on average positive years.
00:01:45
And so you have to be able to ride through these bumps. What we think is extremely important is is taking market volatility into perspective and the best way to do that is through financial plan in, in your financial plan, you can model how much volatility your plan can handle. You can set up your investments in a way that you have buckets of money and you have enough short-term reserves that you maybe don’t have to sell investments in one of those short-term pullback.
00:02:14
Some years market volatility seems a lot greater, and those are the times when it’s really helpful to have a plan to to, to look at the Monte Carlo analysis and and and see that your plan still works and you don’t have to change your lifestyle. And so that’s what we love to do when market volatility pops up is to sit down with our clients and help them understand this as normal.
00:02:35
It’s not fun. We don’t want to overreact and sell in the middle of it and we want to look at your financial plan so you can you can go home feeling comfortable that you can keep traveling. You can keep giving to your favorite charities and helping out your family and doing things you care about, and you can ignore the day-to-day news from. The stock market. Thanks for joining us today.