We have seen a sharp spike in equity market volatility in recent days as concerns about political instability, trade wars and rising global interest rates cause investor concerns.
As you know we have been concerned about stretched valuations, particularly in some parts of the US market, for some time. Building in a prudent buffer into your asset allocation means that we are able to capitalise on opportunities if compelling valuations emerge. More importantly, it also allows you to be sanguine about market ups and downs, knowing that you will never be forced to sell into a falling market.
We expect that volatility will continue but to put this recent sell off in perspective, whilst the Dow is down almost 6% since peaking in early October, it has only merely given up the gains of the last two months.