Charts of the Week

Annual Volatility

Chart of the Week for June 14, 2019 - June 20, 2019

By one measure, 2018 was a normal year of volatility for the equity markets.

Investors likely considered 2018 to be volatile for equity markets. The S&P 500 Index had 15 days when it lost more than 2% of its value and it earned its biggest one-day gain in almost a decade on December 26th. However, 2018 actually ranked near the middle of calendar year volatility. The highest volatility for the past twenty years was in 2009 as the Financial Crisis took hold, and the lowest volatility was in 2017. It may be that 2018 felt very volatile because we are comparing 2018 to 2017.

An important point for investors to remember is that short-term volatility is not as important as a sound financial plan based on your time horizon and investing goals. If your investment time horizon is short, volatility is critical and your asset allocation to equities should be lower. For long-term investors, your long-term financial plan should be more critical than short-term volatility.

© Copyright 2019 ICMA Retirement Corporation, All Rights Reserved. This information is intended for educational purposes only and is not to be construed as investment advice or a solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed here. Past performance is not necessarily indicative of future performance.

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