Displaying items by tag: volatility

According to the findings of the Advisor Edition of State Street Global Advisors’ Inflation Impact Survey, the vast majority of investors who are currently working with a financial advisor, believe their advisors’ insight and guidance are valued more today during the current period of market volatility and rising inflation. The survey revealed that approximately three-quarters of investors have discussed inflation with their advisors and how inflation will impact their investment goals in both the short and long term. 90% say they value their financial advisors’ knowledge and guidance even more during uncertain times, and 86% believe their advisor has helped them remain confident during the current period of rising inflation and market volatility. The data follows the initial findings of State Street’s Global Advisors’ Inflation Impact Survey that showed inflation-induced stress and anxiety is influencing investor behavior with short-term budgeting and long-term financial goals.

Finsum:State Street’s Inflation Impact Survey revealed that investors are placing a higher value on their financial advisor’s guidance during times of heightened market volatility and inflation.

Before the pandemic, advisors and their staff were enjoying elevated compensation levels. But once the pandemic occurred, advisors suddenly needed to take stock of the financial health of their businesses. While the market downturn in 2020 didn’t last long, its effects led firms to become more conservative with their expenses. The continued volatility in the market resulted in firms looking to increase profit margins and aggressively cut costs. Rent and office expenses were the first to be cut, however, the largest expense by a considerable margin was non-owner compensation. According to an article in City Wire USA written by Damian Lo Basso, managing partner, and CFO at Journey Strategic Wealth, the years 2020 and 2021 were the first years since the financial crisis that many firms kept salaries and bonuses flat. In addition, some firms are now tying up to 50% of team members’ bonuses to overall firm performance.

Finsum: Due to the effects of the pandemic and ongoing uncertainty in the market, advisor teams are seeing their compensation being tied to firm performance.

When it comes to September, stocks have a track record of not exactly rocking – much less rolling. For the 30 year period, average returns chime in at -0.34% and -0.26% for the 15-year period, according to forbes.com. The five year period: -0.92%.

And it just keeps getting better with the month in a category of its own as a period when the market held down the rear, drooping on average in every time period.

Now, consider that along with the fact that, already, the year, stoked by factors such as flaming inflation, bulging interest rates and a recession keeping nearly everyone on edge has, you might say, been crackling with volatility. So, how could investors react? Why, they might go shopping for a placeholder for their considerable assets.

Fed chair Jerome Powell, addressing this year’s Jackson Hole Economic Symposium, acknowledged that to stave off growth, it’s probable rates will remain on the high side, not exactly comforting to households and businesses, according to talkmarkets.com.

Trying to read the tea leaves, there are market watchers who believe Powell means he’s no longer homed in on a soft landing. Rather, his focus might on a “growth recession,” as economists characterize it. A growth recession, of course, loosely is marked as a period when the economy’s headed north, yet so slowly that it’s putting a crimp in the volume of available jobs.

A manager at Artemis believes now is the perfect time to consider active fixed income solutions. Grace Le, who co-manages the Artemis Corporate Bond Fund, told Financial Times that an active bond manager’s job is to protect their clients during uncertain times and that is exactly what we are experiencing now. She believes that the reversal of quantitative easing led to more volatility in bond markets, resulting in a “boon for active investors.” Investors are dealing with inflation, macroeconomic uncertainty, and the potential for a recession. Muzinich & Co's co-head of public markets Michael McEachern told the publication that active managers can invest in shorter-duration bonds less impacted by increasing rates and rotate into higher-quality credit that is less sensitive to the current environment. Managers can also avoid concentration in a portfolio and deploy carry trades, which means borrowing at a low-interest rate and investing in an asset that provides a higher return.

Finsum:According to two bond fund managers,investors should consider active fixed income in times of economic and market uncertainty. 

Anyone notice that stocks, lately, have been a bit, well, prickly?

Of course, for awhile there, it segued they’d found their mojo and watching cable shows like CNBC also was a popcorn worthy occasion. Now, that viewing experience likely would give you indigestion.

In other words, yes: vo-la-ti-li-ty.

Now, could this be hitting the gas pedal on an even steeper decline.

Let’s count the possible dividends. In the short term, the wraps are on the corporate earnings season, according to ally.com, and summer? Ready to wave buh-bye. In the eye of an obvious lack of direction, it’s all but an invitation for percolating volatility, the site continued.

Meantime, investors are sliding their attention from the probabilities of a recession and how the markets will react to the Fed.

Against that less than appealing backdrop, Jesmond Mizzi Financial Advisors’ Head of Wealth Management Colin Vella, said that rather than ruing the circumstances surrounding the volatility, investors can make the best of it, according to jesmondmizzi.com.

The global initiative – unlike the war – to get a handle on COVID 19 reassured markets that bouncing back to more normal conditions could be on the short term horizon. 

As the virus started to escalate worldwide, at the dawn of 2020, markets began their descent. However, the downturn didn’t have staying power and bounced back prior to the initial lockdowns.