A Reminder: Volatility, No Stranger to the Markets
September 9, 2024
Wes Ashton
After a relatively quiet first half of 2024, let’s not forget that volatility is an inherent part of the equity markets. It’s common to see declines of at least 5 percent almost every year, with corrections of 10 percent or more occurring in 56 percent of years and drops of 15 percent or more happening roughly one-third of the time.
Even in years when the S&P/TSX Composite Index has performed strongly, there are often significant intra-year declines (see graph below). Since 2005, the average intra-year drawdown has been -15 percent, despite the S&P/TSX delivering an average annual return of around 6 percent.
Successful investing involves preparing for both the inevitable ups and downs that come with market volatility. While it’s never easy to see portfolio values decline during periods of temporary volatility, it’s important to maintain patience and perspective to see these periods through.
*Any view or opinion expressed in this article are solely those of the Representative and do not necessarily represent those of Harbourfront Wealth Management Inc. The information contained herein was obtained from sources believed to be reliable, however accuracy is not guaranteed. The information transmitted is intended to provide general guidance on matters of interest for the personal use of the viewer, who accepts full responsibility for its use, and is not to be considered a definitive analysis of the law or factual situations of any individual or entity. Any asset classes featured in this article are for illustration purposes only and should not be viewed as a solicitation to buy or sell. Past performance does not necessarily predict future performance, and each asset class has its own risks. As such, this content should not be used as a substitute for consultation with a professional tax or legal expert, or professional advisors. Prior to making any decision or taking any action, you should consult with a licensed professional advisor.
Harbourfront Wealth Management was one of Wealth Professional Magazines 5 Star Brokerages for 2022. Wealth Professional is a free online information resource for all Canadian advice and planning professionals. This is not a paid award Harbourfront Wealth Management is not a sponsor.
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