This week’s ATW provides commentary on the recent volatility -and lower markets this month. I like to mention the word lower, because volatility by itself doesn’t tell the whole story. Yes, markets are down this month as they so often are in October.
This article by Dimensional speaks to this by reminding us that:
the market is like a giant information processing machine.
All the influences mentioned above are constantly being assessed by millions of participants, and prices adjust based on those collective expectations. So markets are lower because the collective expectations of investors are lower than earlier in the year. But investors are an optimistic bunch and the article also goes on to say that maintaining discipline is important, because the longer you stay invested, the more likely an investor is to capture the higher returns from securities of asset classes that have historically outperformed over the long term. This is the investment philosophy of every client portfolio we manage.
The market is doing its job, and we believe the rewards will be there if you remain disciplined. And like the funny (courtesy of the New Yorker), let’s not lose our heads!