We continue to see what we call the “volatility index or VIX” increase. VIX is the ticker symbol and name for the Chicago Board Options Exchange’s CBOE Volatility Index, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options. It’s level has more than doubled since the beginning of the year. For the prudent investor though, volatility is not risk; it in fact represents opportunity. We found this simple but effective graphic to share. It shows what risk really is when it comes to investing.
It is important to consider this perspective as we review our investment statements at this time. Our investment behaviour is the largest determinant of whether we achieve our longer term investment goals.
We also came across some further comments that we felt would be constructive to share. No doubt as news headlines may message a cause for concern…there will always be people who are paid in attention. They have incentives to scare you. In order to make themselves relevant.
That’s why pessimism often sounds more intelligent than optimism. Tell somebody things are going to even out in time. They won’t care much.
Tell somebody they are in danger. They will listen to you like there’s no tomorrow.
We need to be reminded that optimism is the simple concept that things tend to gradually get better over time even when things look bleak. It helps to explain why what you’ve done is not as important as how long you’ve done it for when it comes to investing.
(Credit: Jonathan Durocher)