chart of varioius investment market indexes over a 30 year period showing volatility bu t trending growth

Investment Markets volatility is often referred to in discussion as though the markets were actually living beings: it is said of them that they ‘behave badly’; ‘are rising’; ‘are flying’ and so on. Whilst we may recognise these as being metaphors for the activity that is taking place in the market places, they are not actions of the markets per se.

The Markets are Manic! 

This was a popular claim amongst financial journalists and commentators in the depths of the events that resulted in the Global Financial Crisis (the GFC).  Two problems with the above headline: firstly, the Markets don’t have a mind – they reflect the emotions of the traders and investors operating in them; secondly, they are usually moving roughly in line with expectations, providing opportunities for investors and traders who understand these movements. Investment markets volatility is normal, reflecting as it does the views of different investors with differing financial goals and objectives.

That traders and investors were unsettled over the few years (from late-2007/ early-2008) and were not helped by the constant barrage of negative reporting about markets, the financial planning industry and political instability in various regions of the world, is indisputable.

Investment markets volatility to persist

Whilst the wave of economic and market ‘headwinds’ had not abated significantly in the three year interim (up to the time of writing), market participants have driven valuations to a level where it is reasonable to say that the consequences of those headwinds ‘is fairly much priced in’ – and the market participants are starting to act more ‘normally’.

Responding to investment markets volatility

From soon after the markets bottom (in April 2009), the team at Continuum Financial Planners Pty Ltd promoted re-entry to the financial markets on a reasoned and progressive basis: we talked about, and advocated dollar-cost-averaging as an appropriate strategy for those who were struggling to put behind them, the events of the GFC (and the incessant grind of adverse publicity in the daily media).

We encourage clients to develop and follow their recommended investment strategy – under the advice of their personally appointed financial planner at Continuum Financial Planners in spite of the actions of the markets indices on any particular day. Investment markets volatility will persist, but your expectations of it can be measured, and managed.

If you are ready to start or resume your investment intentions, our team of experienced advisers is able to work with you to ensure that a strategy appropriate to your circumstances and financial needs is developed. To arrange a meeting with one of the team, please call our office (on 07-3421 3456), or use our convenient Contact Us facility.

This article was first posted in September 2011; it has been occasionally refreshed, most recently in April 2021.