Market Perspective | October 2017 | Low Volatility: Is It Here to Stay?

October 23rd, 2017 | | Business Dimensions

“The S&P 500 continues to sustain its momentum due to continued activity and earnings growth along with renewed optimism over tax cuts,” as stated by Jeff Saut, Chief Investment Strategist, Equity Research for Raymond James.

While growth continues, somewhat stalled by hurricanes Harvey and Irma, and the path to tax changes unknown, one would expect additional volatility (amount the market swings). Although, with the strength of the ongoing market growth, volatility has remained rather low. It appears that every time the market drops, investors are treating these dips as buying opportunities by buying before any negative impact is felt. This is occurring because the investor still has confidence in the market.

This confidence has been supported by healthy earnings growth, positive economic growth and an extended period of low interest rates. Despite positive earnings estimates going forward, which supports future growth, does the fear that the markets are overvalued cause a correction to occur and volatility to return?

If a correction were to occur, our opinion would conclude a healthy reset in the ongoing upward movement of the market.

The real unknown is the unknown. What we do know and have experienced is that a well-developed portfolio can work over the long-term. Therefore it is important to manage your investments to the appropriate risk profile to ensure proper safeguards are in place to protect your funds should the market take an unexpected turn.

This is exactly what we do at AEGIS Financial. Please reach out if you have questions or would like to discuss your investment opportunities!

AEGIS Financial and Investment Committee

Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing involves risk and investors may incur a profit or a loss. Past performance may not be indicative of future results. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Holding investments for the long term does not insure a profitable outcome. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

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