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MAKING SENSE OF MARKET VOLATILITY

MAKING SENSE OF MARKET VOLATILITY. Name Tile Company DATE. 2. 3. 1. AGENDA. RECENT EVENTS. LESSONS FROM HISTORY. STRATEGIES FOR VOLATILE MARKETS. RECENT EVENTS. A ROLLERCOASTER DECADE…. Technology Bubble. European Debt Worries. Financial Crisis. Source: Yahoo Finance.

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MAKING SENSE OF MARKET VOLATILITY

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  1. MAKING SENSE OF MARKET VOLATILITY Name TileCompany DATE

  2. 2. 3. 1. AGENDA RECENT EVENTS LESSONS FROM HISTORY STRATEGIES FOR VOLATILE MARKETS

  3. RECENT EVENTS

  4. A ROLLERCOASTER DECADE… Technology Bubble European Debt Worries Financial Crisis Source: Yahoo Finance. S&P 500, January 1995 to September 26, 2012. The chart above is for illustrative purposes only.

  5. Euphoria Thrill Thrill Excitement Optimism Optimism Excitement Relief Anxiety Relief Anxiety Denial Denial Hope Hope Fear Optimism Fear Desperation Desperation Relief Panic Panic Despondency Hope Despondency … RESULTS IN AN EMOTIONAL RIDE Euphoria Depression Depression Source: Yahoo Finance. S&P 500, January 1995 to September 26, 2012. The chart above is for illustrative purposes only.

  6. CAUSES OF RECENT VOLATILITY

  7. LESSONS FROM HISTORY

  8. DON’T PANIC OVER THE PRESS 1974 1979 1979 1980 1984 1987 1992 Source: Yahoo Finance. S&P 500, January 1974 to December 31, 1997. The chart above is for illustrative purposes only.

  9. DON’T PANIC OVER THE PRESS Source: Yahoo Finance. S&P 500, January 19995 to October 3, 2011. The chart above is for illustrative purposes only.

  10. FOCUS ON THE BIG PICTURE “BLACK MONDAY” THE CRASH OF 1987 • First 100-point dive in Dow Jones history on Friday, October 16, 1987 • The 2nd was the following Monday Sources: Reuters, Government of Canada.

  11. FOCUS ON THE BIG PICTURE OCTOBER 27,1997 • Dow Jones down 554.26 points, or 7% • 12th biggest percentage loss and 3rd biggest points loss on record • NASDAQ Composite fell 7% • S&P 500 fell 64.63, or 6%, to 877.01 Sources: Reuters.

  12. FOCUS ON THE BIG PICTURE THE AFTERMATH OF 9/11 2001 • Closed for 6 days:longest stock market closure since the Great Depression • Down 684 points (7%):Dow Jones biggest-ever one-day point decline • By weeks end:Down 1369.7 points (14.3%), its largest one-week point drop in history Sources: Reuters.

  13. FOCUS ON THE BIG PICTURE MARKETS TEND TO RECOVER OVER TIME 2008 Financial Crisis European Debt Worries Russian Crisis 9/11 Mexican Peso Crisis Savings & Loan Crisis $106,197 1997 market crisis Latin America Crash of 1987 $10,000 Source Yahoo Finance, S&P 500 January 1970 to September 26,2012 For illustrative purposes only.

  14. STRATEGIES FOR VOLATILE MARKETS

  15. THE BEST STRATEGY IS TO STAY INVESTED MISSING THE BEST DAYS IN THE MARKET IMPACTS RETURNS As of August 31, 2011. Source: Dynamic Funds, Bloomberg.

  16. THE BEST STRATEGY IS TO STAY INVESTED TRYING TO TIME THE MARKETS HAS COST INVESTORS Source: 2011 Dalbar Inc. (US) Research Report. Equity Market represented by S&P 500.

  17. DIVERSIFY BY ASSET CLASS BEST PERFORMING ASSET CLASSES CHANGE FROM YEAR TO YEAR Source: Paltrack, Dynamic Funds. All Indices are represented in Canadian Dollars. Canadian Bonds – Dex Universe Index. Global Bond – Barcap Global Aggregate TR. U.S. Equities – S&P 500 Total Return. Global Equities – MSCI World GR. Canadian Equities – S&P/TSX Total Return.

  18. DIVERSIFY BY GEOGRAPHY THE BEST PERFORMING COUNTRIES CHANGE FROM YEAR TO YEAR 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Paltrack, Dynamic Funds. All Indices are represented in Canadian dollars Mexico – BMV IPC. U.S. – S&P 500 Total Return. England – FTSE 100 Total Return. Canada – S&P/TSX Total Return. Germany – FSE DAX Total Return. Brazil – BOVESPA. France - Euronext Paris CAC 40 PR. Japan – Nikkei 225 Average PR. Hong Kong – Hang Seng Hong Kong Composite.

  19. YOU DON’T HAVE TO TIME THE MARKET DOLLAR COST AVERAGING: BUY MORE SHARES DURING MARKET FLUCTUATIONS INVESTING $500/MONTH FOR 12 MONTHS For illustrative purposes only.

  20. TAKE ADVANTAGE OF DOLLAR COST AVERAGING PRODUCTS THEY CAN SMOOTH OUT MARKET VOLATILITY $52,000 HYPOTHETICAL INVESTMENT IN THE S&P 500 Dollar Cost Averaging Product Lump Sum Source: Yahoo Finance. The above chart illustrates a hypothetical lump sum $50,000 investment in the S&P 500. The Dollar Cost averaging product transfers the $50,000 investment into the S&P 500 over a 52 week period, with the remainder waiting to be invested in cash. For illustrative purposes only.

  21. EXCEPT IN RISING MARKETS IN RISING MARKETS LUMP SUM INVESTING PERFORMS BETTER THAN DCA $52,000 HYPOTHETICAL INVESTMENT IN THE S&P 500 Lump Sum Dollar Cost Averaging Product Source: Yahoo Finance. The above chart illustrates a hypothetical lump sum $50,000 investment in the S&P 500. The Dollar Cost averaging product transfers the $50,000 investment into the S&P 500 over a 52 week period, with the remainder waiting to be invested in cash. For illustrative purposes only.

  22. FOCUS ON THE LONG TERM STRONG BULL MARKETS TEND TO FOLLOW SIDEWAYS MARKETS 14 years sideways 981% 14 years sideways 504% Source: Yahoo Finance, S&P 500 January 1950 to September 26, 2012. For illustrative purposes only.

  23. FOCUS ON THE LONG TERM DOES HISTORY REPEAT ITSELF? • Rise and fall of high growth stocks • The U.S. was committed to a war in Asia • Oil prices have skyrocketed • U.S. unemployment at 9%+ 1982 – 1997 1999 – 2012 1968 – 1982 Source: Yahoo Finance, S&P 500. Light blue chart from January 1, 1999 to September 26, 2012. Dark Blue chart January 1st, 1968 to December 31st, 1997. For illustrative purposes only.

  24. Q & A

  25. IMPORTANT INFORMATION Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in units value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any funds managed by Goodman & Company, Investment Counsel Ltd. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell. This document is not to be distributed or reproduced without the consent of Goodman & Company, Investment Counsel. Dynamic Funds is a division of Goodman & Company, Investment Counsel Ltd.

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