What is it?
Recently, the markets have been more volatile. Some investing strategies compare added volatility to risk in the markets. When markets are more volatile, there may be an added risk or reward of larger moves in the markets.
Last Monday, volatility peaked over 30. That is shown by the candle wick breaking through the line at 30 in March 2023. The chart shows how Volatility of the S&P 500 (VIX) has changed over the last year using a candlestick to represent the price action of each day.
Why does it matter?
Hedgeye Risk Management is an investment research firm that we subscribe to. They believe that a measure of 30 or more is a significant amount of volatility.** When volatility is high, Hedgeye advises investors to manage investments differently. Markets tend to avoid risk more when volatility is at that mark than when volatility is lower. It has been a few months since volatility has reached 30 or more. Many risky investments are being sold off as volatility rises, and funds are being moved to investments that are considered more stable.
There is a chance that these spikes in volatility remain high. If that happens, then a larger sell off may take place. Our current positioning has mostly secure investments as volatility has riskier assets in a tough environment. The Fed will be meeting this week. We are waiting to hear more from them before making any larger changes to the investment model portfolios.
Other articles we found interesting this week:
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Trading View. “Volatility S&P 500 Index”. 3/20/2023. Trading View. https://www.tradingview.com/chart/MeVFuzsD/?symbol=OTC%3ABITW
**Keith McCullough. “Volatility Buckets”. 3/20/2023. Hedgeye Risk Management. https://app.hedgeye.com/
Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.
Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/. Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.