What You Need to Know About Market Volatility :: Wamhoff Financial & Accounting


What You Need to Know About Market Volatility

2015 has been a year of major market volatility, and while the S&P is up 2.86% as of April 24, it’s experienced choppy price action and sharp moves up and down throughout the year. What is the cause of this volatility, and what should you be doing about it? Kyle Jones, Financial Planner at Wamhoff Financial Planning & Accounting, shares his insight.

  • Current Anxieties and Uncertainties Leading to Volatility
    • A pessimistic options market: right now the options market is flashing more pessimism than any time in the last six years. Bearish calls are outnumbering bullish calls by the most since October of 2008, based on economic reports gathered from Bloomberg
    • The Fed announced on March 27th that it would raise interest rates for the first time in more than six years. No date has been set, but Fed Chair Janet Yellen did state that it will happen slowly in the future.
    • Analysts are predicting three straight quarters of falling corporate profits, with companies regularly missing forecasts by the most in six years according to the Bloomberg ECO US Surprise Index.
    • Analysts are expecting the volatility to continue for the rest of 2015.
  • What This Means for Investors
    • The past few years, stock market investors have seen strong returns, so protecting those gains is important.
    • If you haven’t already, review your portfolio, assess your current risk, and consider whether reducing risk and locking in profits makes sense based on your personal risk tolerance and financial / retirement plan
    • Don’t try to time the stock market.
    • Meet with your financial advisor to discuss your portfolio and what changes might be appropriate for your plan.

http://finance.yahoo.com/q/hp?s=^GSPC&a=11&b=31&c=2014&d=03&e=27&f=2015&g=d&z=66&y=0

http://www.bloomberg.com/news/articles/2015-04-01/u-s-bull-run-losing-fans-as-traders-load-up-on-s-p-500-hedges

http://moneymorning.com/2015/04/01/stock-market-predictions-today-point-to-more-volatility-than-usual-in-q2-2015/

http://www.zerohedge.com/news/2015-03-17/options-market-signals-2007-crash-risk-goldman-warns