Client Questions on Recent Volatility

Our office has received a few queries from nervous clients regarding the recent ups and downs the market has taken. The main concern expressed is “is this normal?” or “is this an indicator?”.  The U.S. Wealth of California client base is quite diverse, varying ages, varying professions and most relevant varying degrees of investment experience. We just want each of you to know that we are here to answer all concerns or needed clarity. We understand how important your investments are to you. Since we are experiencing recent volatility we thought it would be helpful to address the volatility the market is displaying.

First, historically speaking, volatility is a characteristic of healthy, functioning markets. Markets have periods of rise, periods of adjustment, and periods of falling. What causes these reactions are many factors. Employment, wage growth, inflation, interest rates, just to name a few. And then there are the abstract reasons, news media, public speculation, political changes, elections etc. The abstract reasons are more reactionary volatility than foundational. So, if we accept that volatility is normal in a healthy market we have answered the first client question.

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