Recent volatility in global stock markets has, as ever, attracted media attention, because it mainly involves sell-offs. I thought it would be useful to see how different types of assets, such as we may actually own, have performed since the first hint of nervousness at the start of August.
To do that I am going to use short term data, obviously. I need to remind readers that short term data is NEVER a useful indication of relative OR absolute future performance. It can also be down right misleading. The data I am using is over one month ending about now, so it starts AFTER the August sell off. Relative to that starting point performance it will look much better that if I had, for example, been able to use 6 week data.
My objective is only to observe the direction of returns from various funds during this period of nervousness, leading to exaggerated volatilty. So one month data is ideal, specifically for this objective.
Does diversification actually work is the sort of sell-off we have seen lately?
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