Goldman Sachs put out its views on the market’s volatility and how to handle it. The bank is not bullish on markets but thinks there are some very good stocks to help weather the storm. Unsurprisingly, Goldman says investors should buy stable stocks to help get through the turbulence, as such hum-drum stocks look like they have room to run. "Stable stocks also trade with undemanding valuations, supporting the likelihood that they will outperform if the macro environment grows increasingly challenging. Stocks with stable share prices and stable earnings growth generally trade with a valuation premium relative to more volatile peers and to the typical S&P 500 stock. However, relative valuations today are much lower than they have generally been during the last few years."

FINSUM: This is essentially a low-vol, value play, and that makes perfect sense right now. Very stable companies are likely to get through the economic upheaval better than their peers, so on a relative basis they should outperform.

Recession panic is rampant and over four-fifths of the US think the economy is going to turn into a recession in 2022 according to a CNBC poll. The rising inflation is the primary concern and a major factor give how well other area of the economy are performing. As a result, investors and hedge funds are turning to mid-cap stocks to prepare for the worst. Capri Holdings Limited is being held by over 40 hedge funds and carries an attractive P/E ratio of 14.23 for many investors. Next up is Valvoline Inc. which has seen its sales boom as it expanded into EV. Finally, nearly 50 hedge funds are holding luxury accessory company Tapestry Inc. and have almost $900 million in investments there.

FINSUM: Stable stocks could provide some recession cushion if things turn for the worst.

Model portfolios continue to grow in prominence among advisors. Every quarter, a higher percentage of advisors are adopting models and AUM has been growing considerably. Some evidence suggests a lot of the AUM growth is coming from some “power users” but the movement is still broad-based. On the back of that growth, Fidelity is expanding its suite of popular model portfolios. The company has launched Fidelity Target Allocation Tax-Aware Model Portfolios, which include nine equity and fixed income mixes, each versioned for I and Z share classes. The models are available through its managed account platform, Fidelity Managed Account Xchange (FMAX), and the Envestnet platform.

FINSUM: Models are making it easier and easier for advisors to manage money and save time, which boosts margins and enhances client service overall.

The IMF has warned investors that there are growing concerns about an emerging market debt crisis. There is anxiety that sluggish growth, higher interest rates, and surging inflation will hurt developing economies much more severely than developed ones. They will be disproportionately affected because highly indebted countries will have a dip in their investment and suffocate their currencies. These concerns aren’t new and emerged at the start of the pandemic, but this swell seems different. The Fed responded by pumping trillions into the economy in 2020 and they are doing the exact opposite now. Additionally, war and other risks are heightened now with Russia-Ukraine’s escalation.

Finsum: Investors searching for yield should be wary of emerging market bond funds given unprecedented risk levels.

There are several threats that are targeting portfolios right now in terms of volatility. The first is inflation, and investors need to make considerations like planning ahead for the near term for big financial costs. Advisors can also help investors with rising interest rates. Rising interest rates mean variable debt will become more costly so more payments are better in the short run, and locking in fixed rates could be smart before yields climb too high. Finally, concerning general volatility due to slowing growth, it really depends on demographics. For young investors, advisors should steer them through market difficulty by bringing their experience with it previously. For more seasoned investors nearer to retirement, investors should consider pivoting to safer assets in order to avoid sharp losses in market swings.

Finsum: There are intricate strategies or specific funds to help in terms of volatility that advisors should consider.