Our CIO comments on market volatility

January 4, 2019

Greg Davis

Greg Davis

Vanguard Chief Investment Officer Greg Davis offers perspective on recent market movements.

If the recent U.S. stock market gyrations have your clients' heads spinning, they're not alone. With major indexes swinging up and down daily, it's easy to understand why your clients might be feeling a bit seasick.

Three thoughts that might help in your client conversations:

  • Behavioral coaching tip #1: Maintain perspective. The markets have been more volatile lately. But your clients may be surprised to learn that the increased volatility brings us closer to the historical norm. Clients may have anchored their expectation to the lower-than-normal volatility we experienced in 2017.

Don’t let turbulence distract: Keep clients focused on the longer term

Chart shows volatility and index prices for the S & P 500 between January 1, 1980 and December 31, 2018.
  • Behavioral coaching tip #2: Don't do anything rash. If your clients have been invested for years in a broad, diversified mix of stocks and bonds, their portfolios likely have appreciated. And the risk of timing an investment decision poorly is generally higher than the risk of changing nothing at all in your portfolio. Remind clients that it's also a decision to do nothing.
  • Behavioral coaching tip #3: Check clients' asset allocation. If market movements have meaningfully altered the ratio of stocks, bonds, and other asset classes in their investment plans, it may make sense to do some rebalancing. 

If your clients are not especially concerned about the market's fluctuations, I say: Thanks for reading. If your clients are growing increasingly concerned about the fluctuation in their portfolios, your work as a proactive behavioral coach can help keep your clients' investment goals on track through volatile markets.

For more on helping clients with market volatility, view this piece:
When will we get back to average market returns?


All investing is subject to risk, including possible loss of principal.

Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.


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