Better conversations during times of market turbulence

The road to investment success is rarely as smooth as we would like. Market speed bumps can appear in many different forms and make clients question their portfolios. As an advisor, we know what the logical course of action is to weather a market sell-off. However, often your clients see the values of their portfolios fall, sparking panic and irrational behavior. Even though the current volatility is unprecedented, it is during these difficult times to remember that the markets have been tested before.

Here are some examples that may help your client conversations regarding market volatility.

Patience may pay off

Even after the two worst drawdowns in the last 25 years (tech bubble and financial crisis), many investors who avoided selling would have likely recovered their losses within 5 years or less.

Market charts - Patience can pay off

Returns are not symmetrical

It becomes increasingly difficult to break-even on investments following a substantial drawdown, making downside protection an important consideration.

Historical volatility

Volatility in February 2020 occurred quickly but was still within historical norms. Despite an average intra-year drawdown of 15% over the last 20 years, the S&P 500 finished positive in 15 of 20 years.

Market chart - Recent historic volatility still within calendar year norms - Chart image

BMO may help smooth the ride

While volatility has picked up, investors don’t have to subject their portfolios to the full force of the unpredictable swings in the market. BMO has a suite of products that may help dampen the impact of these rapid market fluctuations on their portfolios.

Better conversations. Better outcomes.

At BMO Global Asset Management, we believe better conversations lead to better outcomes for your clients and your practice. We seek to enhance your client conversations with:

  • Ideas for your portfolios
  • Access to our portfolio managers
  • Ease of delivery

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Disclosures

Market Turbulence Resulting from COVID-19. The outbreak of COVID-19 has negatively affected the worldwide economy, individual countries, individual companies and the market in general. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks.