Here is a graph from EconompicData, which shows ETF performance in September, October, and most of November:
The above graph paints a picture of what most market followers already knew – there has been a “risk on, risk off” trade over the past few months. Further, the moves each month were pretty sizable. Take a look for instance at Emerging Market equities – down 18%, up 17%, and then down 11% each in a separate month!
My big takeaways from the graph are these:
- Given how riskier assets are moving in lockstep, it’s pretty evident that macro data is driving the market and however the macro issues (namely Europe) shake out will ultimately determine the fate of the markets.
- The size of moves and how quickly they change indicate the markets are very uncertain.
Ultimately, even if my conclusions above are off base you can’t argue that markets aren’t very volatile right now. If you are struggling with the daily moves, reducing your portfolio’s beta might be a viable solution.
