Page 31 - LIN November 2022 Issue

INSIGHTS FROM TOM MORAN AIF®

Chairman, CEO and CIO, Moran Wealth Management ®

A
certain degree of unpredictability can be expected in financial markets. This is
traditionally measured through volatility which tracks how much the overall market
fluctuates up and down. While not all aspects of volatility are negative, it can feel
distressing in the moment. Understanding the cause of volatility and its role in long-term
investing can help mitigate the emotional rollercoaster market swings can cause.
This past year, we have been experiencing a higher level of volatility. A variety of circum-
stances contributed to these market fluctuations: the Russia-Ukraine War, supply-chain
disruptions, higher-than-expected inflation, and speculation regarding the Fed raising
interest rates. Despite these external dynamics, we believe there remains robust reason to
stay the proverbial course. It is beneficial to observe trends over time. While past perfor-
mance does not guarantee future results, history can advise that quickly rebalancing your
portfolio because of negative volatility may be unfavorable because reactionary and fear-
based investment strategies are often less likely to deliver long-term results.
Even following apparently dramatic declines, markets will generally correct and settle
at or above prior baselines. This may, however, not be true of individual securities which
may not reach their prior highs. Market timing is very difficult to execute correctly. It is par-
ticularly difficult because some of the strongest days in the S&P 500 occur near some of
the weakest days. For example, the S&P 500 climbed 11.58% and 10.79% respectively on two
trading days in the middle of the 2008 bear market. As an investor, we feel it is appropriate
to think of performance returns over yearly and, in fact, decade horizons. Such awareness is
key to strategic investing.
A knowledgeable investment advisor might explain that upward and downward swings
in valuations are not only inevitable, but they may also be positive. Financial markets are
not static. They are highly responsive to an assortment of factors. Most of which, if not all,
fall outside the control of any one individual. However, opportunities can be identified within
challenges. With a disciplined approach, changes in valuation can present useful indicators
of when to sell or buy certain stock.
It is worth bearing in mind that volatility during recent years has, at times, been less
than what longitudinal trends may predict. In assessing volatility, the standard deviation of
monthly returns of the Standard & Poor (S&P) 500 is a commonly used metric. Whereas that
figure has historically averaged at 15.6 percent, in 2017, it hit its second-lowest average since
1957 of 6.7 percent, creating some unease the following year when higher volatility resumed.
We believe that the prudent perspective is to take diversified positions that suit your
own needs and risk tolerance. Staying somewhat philosophical about unavoidable shifts
and eventual gains can lessen the apprehension that may accompany any immediate,
dramatic losses. Remember, the stock market, on any given day, is a snapshot. Your strategy
is to create a coherent photo album; when you need those assets, all the pictures together
will tell the story.
Individuals may often make emotional decisions during challenging markets that
impact their investment habits. It can be hard to focus on the future while feeling the
uneasiness of the present. However, as a firm, we aim to provide our clients with the clarity
and knowledge needed to continue towards their long-term financial goals with peace
of mind. Throughout our team’s 30-year history of advising clients, we have navigated
countless market changes and upheld the best interest of our clients. Our extensive team
welcomes your inquiry. You can set up an appointment with one of our financial advisors
today by calling 239-920-4440. We look forward to speaking with you.

P: (239) 920.4440 I Thomas.Moran@MoranWM.com I www.MoranWM.com I 5801 Pelican Bay Boulevard, Suite 110, Naples, FL 34108
This presentation contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed
as investment advice. Moran Wealth Management ® , LLC (“MWM”) is a registered investment adviser. The information contained herein is based upon certain assumptions, theories
and principles that do not completely or accurately reflect any one client situation or a whole exposition of the topic. All opinions or views reflect the judgment of the authors as of
the publication date and are subject to change without notice. For additional information about MWM, including its services and fees, send for the firm’s disclosure brochure using
the contact information contained herein or visit advisorinfo.sec.gov.

Life in Naples November 2022 31