We know, for instance, that the long-term bias of equity markets is up. Agreed, it's hard to keep a handle on that one, especially when you're looking at the much-reduced value of your current portfolio. But each and every one of those market gods has since bit the dust. Basically, because it can't be done. So it's not the inherent volatility that puts portfolios at risk.
Volatility represents fluctuation, both up and down.
It's certainly connected to risk, but it's not the same thing. It's fear that turns temporary declines into permanent losses and greed that pushes folks to buy in at heady prices, expecting future gains unrelated to profits to continue unabated. An old saw in the investment business is that as soon as every economist is onside predicting a recession, it's already over. We welcome your feedback. All rights reserved.