Volatility, A Skewed Reality


Volatility drag – or how volatility exacerbates the divergence between arithmetic returns and geometric returns – is something that is often debated by investment managers and investors alike. A common argument is that while higher volatility increases your downside, it can also increase your potential upside and therefore it may be rational to be risk-seeking to some extent. Another argument is that with a long enough time horizon, investors don’t actually need to worry about volatility, because they can tolerate the ups and downs of the market.

O Canada! Why We Diversify

The COVID-19 global pandemic is a historic event that has galvanized intergenerational cohorts in the fight against a common enemy. I will not attempt to wax-poetic about the implications this will have on our way of life for when we inevitability get through to the other side of this epidemic, as there are much more qualified experts that can offer better educated opinions on the matter then I can. What I will attempt to do is explore a way to reframe the implications of this health crisis for investors that are dealing with both emotional and financial stress as a result of the pandemic.

Diversification Performance Through the Panic

If you have been following financial markets, even casually since February, you would know that we are in the midst of one of the fastest and sharpest equity market drawdowns in history. Although it may feel like the financial world is on the brink of collapse, a recent article by Ben Carlson of A Wealth…

The Increased Liquidity of ETFs

In times of turbulence and uncertainty, liquidity is a prized possession in financial markets. One of the interesting features of the ETF vehicle is its ability to provide increased liquidity relative to the underlying positions they track. This article from David Nadig describes how when liquidity dries up in the bond market, ETFs are able…