Testing Risk Tolerance

So far this year the stock market has been a relentless ride of unnerving drops and sudden rebounds. Anxious clients are calling. You remind them that you have both agreed to a plan based on their risk tolerance and goals. That equation is behind their portfolio allocations and as long as they stick to the plan, they will end up where they need to be. But the more the ground falls out from under them, the more doubt may begin to creep in: Just how accurate was that risk-tolerance profile? Assessing client risk tolerance is standard procedure. Broker/dealers are required by FINRA rules to assess risk tolerance as part of its suitability standard for evaluating investments. Registered investme

Stock Market Returns: Volatile, Unpredictable… and entirely Normal

Stock markets have been jittery lately. After improved sentiment last quarter, investors now appear to have heightened concerns. Not only have fears around China resurfaced, stoked in part by downbeat economic data and circuit breaker sell-offs, but weak global commodity prices also continue to elicit concern. Oil now sits below $30 per barrel, while the VIX index, a measure of volatility in the S&P 500, remains at an elevated level (approximately 29). A lot has been going on in the global economy…enough that some shops have issued dire warnings of the days ahead. But while recent events do appear negative—insofar as they represent bad cards that have come up—they are not wholly surprising;

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