Tag - market volatility

Advice to the Advisors

Warren Buffett Lesson on Risk and Volatility | Sheaff Brock Institutional Group

The Lesson Many of Your Clients Were Never Taught

“That lesson has not customarily been taught in business schools,” Warren Buffett observes, referring to the concept that “Volatility is far from synonymous with risk.” In a 2015 letter to shareholders, the Berkshire Hathaway CEO wrote about the difference between risk and volatility. Many investors, he observes, “conflate these concepts, costing themselves money.” Of course, the fact that stock prices will always be far more volatile than cash-equivalents must play a part in any advisor-client discussions of portfolio design. But, [...]

Advice to the Advisors

Sheaff Brock Institutional | Market Movement | Risk and Volatility

Today’s Advisors and Investors Do Not Equate Risk and Volatility

By the 1990s, forty years after Harry Markowitz had introduced his Modern Portfolio Theory, the concept of risk avoidance had gained enormous influence in the world of portfolio management. Computer programs had come into being plotting different investment mixes into an “efficient frontier,” causing many financial professionals to equate risk and volatility. Michael Keppler, then First VP of Commerzbank Capital Markets in New York, viewed this development with concern, questioning Modern Portfolio Theory’s use of volatility as a proxy for [...]

Advice to the Advisors

Option Overlays Timely and Timeless | Sheaff Brock Institutional Group

Option Overlay Strategies—Timely, Yet Timeless

One over-arching theme in any financial-advisor-to-client messaging is the power of time, with the goal being to select investment tactics which are timely, yet which belong in portfolios based on timeless wisdom. In that context, option overlay strategies, Sheaff Brock posits, become a particularly relevant topic. There’s nothing new about option overlays. In fact, as Institutional Investor explains, the majority of U.S. pension plans have adopted overlay techniques as part of their investment tactics. And, while in investment vocabulary, the term “overlay” can have [...]

Advice to the Advisors

Market Volatility | The Reality of Its Ups and Downs | Sheaff Brock Perspectives

Volatility 202—Advisor-to-Client Reality Talk

“Stock market volatility is a great way to test your nerves as an investor,” writes Leslie Albrecht in marketwatch.com. As for advisors, no doubt their nerves have been put to test as well in recent weeks. “What is this thing called love, this funny thing called love?” is Cole Porter’s well-sung query, asking the Lord in Heaven above: “Why should it make a fool of me?” Recent market volatility has had many investors asking a similar question about the stock [...]

Advice to the Advisors

Sheaff Brock Institutional | Economic Indicators Through the Windshield

Indicate to Your Clients—Economic Indicators Point Upwards

Leading indicators, those pieces of data economists view looking forward “through the windshield,” continue in an upward trend.  In addition to stock market and interest rate data, economic indicators include: real gross domestic product (GDP) money supply stock futures the Consumer Price Index the Producer Price Index current employment Much of the data for economic indicators is compiled by: the Conference Board’s Consumer Research Center the U.S. Department of Labor’s Bureau of Labor Statistics the U.S. Census Bureau Who uses leading indicators [...]

Advice to the Advisors

Sheaff Brock Institutional Group | Client Handholding During Market Volatility

Market Volatility Handholding 2.0

Make no mistake—your clients are talking about them. No, not the scandals and shootings—it’s the ups and downs of stock market volatility. “Watching the stock market daily in 2017 made for a rather dull sport, even though it was a boon for investors as stock indexes notched record after record. Not so this year,” writes Anna-Louise Jackson in nerdwallet.com. The talking heads are out in force, encouraging clients’ concerns: “We’ve got so many competing narratives, it will take a while [...]

Advice to the Advisors

Sheaff Brock Institutional Group | VIX | The "Fear Factor"

When Market Volatility Causes Client Fear, Cite the “Fear Factor”

The VIX, ticker symbol for the Chicago Board Options Exchange’s Volatility Index, has the nickname “fear factor.” Paradoxically, a high VIX is not necessary bearish for stocks, you can remind clients, because market volatility refers to upward movements in the market along with downward ones. What a high VIX reading does mean is that investors are seeing significant risk that the market will move sharply, whether up or down. The VIX tends to be low in “ho-hum” times, when [...]

Advice to the Advisors

Sheaff Brock Institutional Group | client watching tv needing comfort care for investment market volatility

Financial “Comfort Care” During Market Volatility

Comfort care, in geriatrics, involves offering attention to the psychological and spiritual needs of the patient and the patient’s family. These days, it seems, financial advisors are being called upon to provide comfort care to their investors, many of whom are suffering from market volatility-induced manifestations of the investor fear factor. It’s no exaggeration to say that advisors today serve as our industry’s “financial health psychologists,” understanding how psychological, behavioral, and cultural factors contribute to our clients’ financial health—or [...]

Advice to the Advisors

Market Volatility Roller Coaster Ride | Sheaff Brock Institutional Group | Advice to Advisors

At the End of the Day, Market Volatility can be Bullish

“Somewhere along the line, the word ‘volatility’ became code for a declining stock market,” Robert Burgess notes in Financial-Planning.com. “The simple fact is the recent swings are closer to what is considered normal, and investors should be thankful,” Burgess asserts. Rising volatility, he predicts, will lead to a healthier market, with better “price discovery,” which is a fancy way, he states, of saying greater differentiation in the values between good and bad stocks. It may be time to have “the [...]

Advice to the Advisors

Sheaff Brock Investment Advisors | woman with a bad cold on the couch

Advisors, Pass It Along: Recent Market Pullback Very “Precedented”

“Dow plunges 1,033 points and sinks into correction,” the money.cnn.com headline practically jumped off your clients’ computer screens February 8th. Now what? They’re wondering. Is this the beginning of The End? Whoa….Stop that anxious caller or visitor right there. This “correction”?  The word “unprecedented” is simply misplaced in describing the volatility we are now experiencing. The pattern for the S&P 500, you need to explain, has been to correct every 18-24 months, with the last correction event having occurred 25 [...]