The August 2019 optimal portfolios are now available to subscribers of ETFMathGuy. So, please log in and select your discount broker to see the effect of current market conditions on our optimal portfolios. In this post, we highlight the effect of the recent low market volatility on portfolio turnover.
Low volatility is here, for now…
As discussed in yesterday’s Wall Street Journal article entitled “Markets are Eerily Quiet Right Now“, market volatility has been quite low recently. For the past 35 days, the S&P 500 hasn’t changed by more than 1%. Consequently, the August 2019 portfolios won’t differ much from the previous month. For instance, consider the Vanguard moderate portfolios generated over the past two months.
As these simpler portfolios demonstrate, low volatility produces less turnover. Here, none of the portfolio weights changed by more than a few percent.
Where will the stock and bond markets go from here?
Frankly, we don’t know, as we believe that markets are generally efficient. Market volatility will certainly return to a more typical level at some point in the future. But, when will this occur? Perhaps volatility will pick up when many professional traders return from summer vacation? Or, perhaps markets will stay quiet until the start of the next earnings season?
In any event, when market volatility does return, our monthly portfolio updates will pick up these dynamics and generate a new set of optimal portfolios. We hope you will stay tuned!
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