After a long period of relative calm in the markets, the increase in stock market volatility in recent days has renewed anxiety for many investors.
The second quarter 2020 saw a significant rebound in equity markets following the jolting declines in the first quarter. Domestic small company stocks (per the Russell 2000 Index) led the way with a return of 25.42%, followed by the S&P 500 with a return of 20.54%.
To say that equity markets had a challenging start to 2020 would be an understatement. The record highs reached in mid-February by the S&P 500 seem like a distant memory after the 30% drop in March – the quickest decline from a new high ever recorded.
As a whole, 2019 was a strong year for risk assets. Domestic equities led the way, with the S&P returning 31.49% for the year.
Year to date, global equity market returns remain strong, but returns were mixed for the third quarter.
After another tough year for international stocks, we’re reminded of the popular Clash song from 1981 (Should I Stay or Should I Go). In 2019, investors may question the inclusion of international stocks in their investment portfolios.
So that’s what market volatility feels like! It has been a while since we’ve had dramatic swings in stock markets across the globe. But these past few months have been a reminder of how volatile markets can be.
There are many ways to make a fortune. You might inherit money, win the lottery or build a thriving business and sell it. You can also work hard in your career, save and invest with discipline. Making a fortune often includes elements of risk and luck.
Presidential elections bring heated emotions from both sides, especially when it comes to protecting your financial investments. As humans, we’re often driven by these strong feelings, but it may come as a surprise that they usually don’t have a large impact on financial markets.
There is a myth that is pervasive in the investment industry that most historical investment gains are attributed to dividends and the stocks that pay them. If this were true you could make a case for owning only dividend-paying stocks.