Transcript: Is Today’s Volatility ‘Normal’?
Luc de la Durantaye
Chief Investment Strategist and CIO, Multi-Asset and Currency Management,
CIBC Asset Management
So we've had a lot of question on volatility and whether this environment of volatility is normal or abnormal. I think what investors have witnessed over the last five years is more of an abnormally low volatility environment because of the policies of central banks that have suppressed historical volatility.
The other element is that in a late economic cycle – which we are; we’re in the longest economic expansion - then it is a bit normal that volatility increases because there is more uncertainty about when the cycle will end and there is more activity from central banks and financial markets become concerned about a potential policy mistake.
And so from that perspective that also stokes higher volatility. So volatility is likely to remain in 2019 but investors may review how diversified their portfolios are and that can help dampen the volatility of your personal portfolio. The other element - active management - can also help in having active managers taking advantage of that higher volatility through judicious stock and market selection. And so there are ways to dampen the volatility in the marketplace.
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