Why Volatility is a Sign of a Healthy Stock Market

The future carries a lot of uncertainty. With this in mind, predicting the near term and trying to pick market bottoms or tops is a futile exercise

Cyrique Bourbon 6 November, 2018 | 2:22PM

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October certainly lived up to its fear-driven reputation. It was an ugly month for risk-taking investors once again, conjuring memories of the Great Depression in October 1929, Black Monday in October 1987 and the Global Financial Crisis in October 2008.

2018 was not nearly as dramatic as the examples listed above, although attribution at these times is always far more complex than we later believe in hindsight. This time around, stretched valuations, which we have noted for some time, are likely to have played a role, especially in the tech sector, combined with growing concerns around interest rates and vulnerabilities to Chinese growth.

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About Author

Cyrique Bourbon  is multi-asset portfolio manager for Morningstar Investment Management EMEA

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