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Helping Clients Understand Volatility

A little under a month ago the VIX spiked dramatically due to bitcoin reverberations in tech markets and macro inflation trends, and it’s trending upward again. Many investors get wary and want to pull out of the market in these times, but guiding them through them is critical to a personal connection. Clients need to first be assured that these gyrations can be normal or even healthy in an economic recovery, particularly the brief one we have seen in response to Covid. The long-drawn-out recovery of 2008 had less volatility because policymakers reacted slowly. The fast reaction by the Fed and both previous and current Presidential administrations bolstered the recovery, but it will cause volatile macro results. These will translate into volatile market reactions. Finally, as stimulus starts to slow, help steer clients toward new investments. High yield bonds and momentum underperform as the economy is hitting peak overheating, but value stocks can provide steady returns as markets bounce around. This combination of ease and redirection will help your clients understand volatility and see it as an opportunity. 

Which of your clients care the most about volatility? Get better insight with our personality assessment.

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