Emotional investing magnifies volatility and volatility is not necessarily the same as risk – what investors need to know
Shane Oliver, AMP Capital Head of Investment Strategy and Chief Economist.
The attached note looks at volatility in investment markets.
The key points are as follows:
• The past year has seen volatility in investment markets spike higher.
• While fundamental drivers of volatility have fallen over time, investor sentiment has become a bigger driver.
• Volatility may remain elevated for a bit yet, but the key for investors is to recognise that volatility is not necessarily the same as risk and to adopt strategies to avoid being sucked into emotional responses.