{"id":350,"date":"2015-09-02T07:40:45","date_gmt":"2015-09-02T14:40:45","guid":{"rendered":"https:\/\/chaltenadvisors.com\/blog\/?p=350"},"modified":"2015-09-02T07:43:50","modified_gmt":"2015-09-02T14:43:50","slug":"volatility-got-you-spooked-emboldened-want-to-scream-its-dress-rehearsal-time","status":"publish","type":"post","link":"https:\/\/chaltenadvisors.ca\/blog\/volatility-got-you-spooked-emboldened-want-to-scream-its-dress-rehearsal-time\/","title":{"rendered":"Volatility got you spooked? Emboldened? Want to scream? It’s dress rehearsal time."},"content":{"rendered":"
\"Dress<\/a>
Want to scream?<\/em><\/figcaption><\/figure>\n

We believe in an evidence-based, disciplined approach to investing. \u00a0Once an investment plan is established and courses of action predetermined, market volatility like that which we’ve been experiencing lately won’t phase you at all. \u00a0Right? \u00a0Wrong. \u00a0Having a plan in place doesn’t mean you feel any differently during market swings, but it just might\u00a0stop you taking action based\u00a0on those feelings – actions that\u00a0might adversely impact your future investment experience.<\/p>\n

If you’re easily spooked by market dips you might be feeling that it’s time to drop your stock holdings in favour of bonds or cash in case things get a lot worse. \u00a0On the other hand, perhaps you’ve been predicting this precise timing for a market drop and the recent volatility has you feeling emboldened and tempted to double down on your bets. \u00a0Maybe you just want to scream. \u00a0While these feelings represent different\u00a0ends of the emotional response spectrum, they are equally as dangerous to you as an investor. \u00a0If these feelings are strong within you, you should use this opportunity as a dress rehearsal to test your gut in case things get really volatile.<\/p>\n

Investment success means committing to the long term and sticking with an investment allocation that is suitable for your risk tolerance. \u00a0Your risk tolerance is in turn driven by your need, ability and willingness to take risk. \u00a0Your emotional response to the current volatility should be giving you some good signals as to your willingness to take risk. \u00a0Treat this as a dress rehearsal before the real show gets underway\u00a0– you\u00a0want to be as prepared as possible so take the\u00a0opportunity to test your risk tolerance and prepare yourself properly. If you want to achieve investment success you have to be willing to ride out all the periods of market volatility. \u00a0While most\u00a0investment plans consider average annual market returns, \u00a0in fact volatile returns are a lot more normal than most people think.<\/p>\n

In a Bloomberg article<\/a> from April 2015,\u00a0Barry Ritholtz examined data from Dimensional Fund Advisors and concluded that “Average, as it turns out, is surprisingly rare. Radical standard deviations year-to-year only even out over long periods of time. In any given year, markets are much more of a roller coaster than the averages might suggest.”<\/p>\n

What we’ve experienced over the last couple of weeks isn’t even that volatile in the grand scheme of things – we sort of ended up where we started. \u00a0It’s likely not even enough of a swing for most people with a disciplined approach to rebalance their portfolios. \u00a0The financial media would have you believe the end of the world is nigh. \u00a0Sure, it might get a lot worse. \u00a0Or, it might get a lot better. \u00a0You don’t know, I don’t know, and neither does anybody else. \u00a0Use this opportunity as a dress rehearsal, deepen your understanding of\u00a0your risk tolerance and prepare yourself as best you can by creating a plan that matches it.<\/p>\n

Please take our free questionnaire<\/a>.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

We believe in an evidence-based, disciplined approach to investing. \u00a0Once an investment plan is established and courses of action predetermined, market volatility like that which we’ve been experiencing lately won’t phase you at all. \u00a0Right? \u00a0Wrong. \u00a0Having a plan in place doesn’t mean you feel any differently during market swings, but it just might\u00a0stop you […]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,16,10,7,15],"tags":[],"class_list":["post-350","post","type-post","status-publish","format-standard","hentry","category-all-posts","category-asset-allocation","category-evidence-based-approach","category-graham-bodel-posts","category-risk-and-return"],"_links":{"self":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/comments?post=350"}],"version-history":[{"count":6,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/350\/revisions"}],"predecessor-version":[{"id":357,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/posts\/350\/revisions\/357"}],"wp:attachment":[{"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/media?parent=350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/categories?post=350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chaltenadvisors.ca\/blog\/wp-json\/wp\/v2\/tags?post=350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}