The S&P 500 dropped 3.1% and the global stock market dropped 3.3% during the week of 2019/07/29 – 2019/08/02. It was a meaningful drop but nothing dramatic.
However, the market is supposed to be on the verge of a regime change and people are nervous. The CNN Money Fear & Greed Index shows a clear mood swing.
If you are a financial advisor, what would you tell your clients if they call today?
Our Real-time Risk Monitor visualizes market dynamics to help you understand what is really going on.
On the risk-return chart below, the mini pie charts on the dotted line indicate the actual risks and returns (annualized) of a set of model portfolios for the 1-month period ending 2019/08/02, as compared to the 30-year averages on the solid line.
How do you make sense of this? If you believe that the macro-environment is fine, you can take a look at the longer-term to see if it is time to panic yet.
The charts below show the 3-month and 6-month period ending 2019/08/02, respectively.
By showing this to your client, you can reduce panic in a few minutes instead of being tied in a 30-minute conversation talking about “buy and hold”, which people may or may not believe.
The truth is, buy and hold may not be wise at times, for example, during a financial crisis. Read this to learn how to monitor financial crises.
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