Trifecta – Volatility, Crude Oil, and China
Global stock markets continues to get hammered amid a shifting landscape of slowing growth in certain parts of the world and declining oil prices.
Volatility is the norm, not the exception. Historically, when markets decline by 10% or even 20%, subsequent 1, 3 and 5 year periods average solid double digit annualized returns. It is good to reflect on the data during times of market turmoil.
Declining oil prices helps most of the world’s economies, yet recently, dropping crude prices has correlated with a declining stock market. History tells us this is the exception and a deeper look at supply and demand suggests that it is oversupply driving prices lower, not weakening demand.
China has been the proverbial canary in the market coal mine, but the headline news doesn’t tell the whole story. China is a bifurcated market of A and H class shares. What is in your portfolio? The more liquid, less volatile H shares. Also of note, China’s stock market is a tiny sliver of the world’s markets so it pays to keep some perspective.
Click on the links below to read the details on these three timely subjects. Articles written by Dimensional Fund Advisors.