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The analysis of the stock market volatility and ways to mitigate the risk

By Ivan V. Sichkar on March 1, 2021 • ( 0 )

Oftentimes a successful investing requires the time commitment, ability, and wiliness to take risk. When it comes to the real life, very few investors have the luxury and wiliness to meet these conditions to become successful. In this paper, I analyze the stock market risk and highlight difficulties to remain calm and rational during volatile times. For risk averse investors, one of the solutions is to have a diversified portfolio. The simple 50/50 asset allocation strategy combines a broadly diversified equity index with long-term government bonds. It is one example of a simple diversification strategy.

Recent Posts

How will the new US Secretary of the Treasury Janet Yellen effect the Economy and the Stock Markets?

By Ivan V. Sichkar on January 27, 2021 • ( 0 )

President elect Joe Biden nominated Janet Yellen as the 78th United States secretary of the treasury. In my opinion, Janet Yellen will support aggressive fiscal stimulus of the US economy at the beginning of her new job.
Forecasting the Future Standard & Poor’s 500 Index for the Year-End 2021

By Ivan V. Sichkar on January 11, 2021 • ( 0 )

How much will the stock market return in 2021? Is the stock market cheap or expensive?
Valuation of Government Bonds

By Ivan V. Sichkar on December 21, 2020 • ( 0 )

Does it make sense to invest in government bonds now? Current valuation of government bonds became expensive. In this paper, I compare the total return on the iShares 20+ Year Treasury Bond ETF (ticker TLT) with the real yield on the 10-year US treasury bonds. By investing in the long-term US government bonds when the real rates are negative, makes such investment speculative and risky.
How did the international stock markets perform during the Covid-19 recession?

By Ivan V. Sichkar on October 7, 2020 • ( 0 )

How did various stock markets around the world weather the Covid-19 pandemic? The degree of the stock market correction and recovery was different from one country to another.
How much home can you afford to buy due to the decrease in interest rates? Analysis of today’s housing market.

By Ivan V. Sichkar on September 28, 2020 • ( 0 )

For home buyers lower interest rates increases home affordability. As rates decline, the amount of money one can borrow increases while the monthly payments stays the same.
The Simple 50/50 Asset Allocation Model – Proven to Withstand the Financial Crisis of 2008 and Covid-19 Pandemic

By Ivan V. Sichkar on September 16, 2020 • ( 1 )

Investors may not be able to control their emotions, but they can control how they invest. For risk averse investors, selecting a model with lower volatility is a prudent decision. A risk averse investor is more likely to tolerate small losses and stay invested long-term with lower volatility portfolio
Chinese Economy Effect on the US Stock Market

By Ivan V. Sichkar on February 11, 2020 • ( 0 )

How much influence does the Chinese economy has on the US stock market? Coronavirus has closed Chinese borders and air connections with the US and many other countries earlier this year. It is still unclear how long this quarantine will… Read More ›
Forecasting the Future Standard & Poor’s 500 Index Return for the Year-End 2020

By Ivan V. Sichkar on January 3, 2020 • ( 0 )

This is my eighth annual forecast of the S&P 500 Index return for the year. It is based on the simple linear regression model. The model uses Gross Domestic Product (GDP) as explanatory variable to the performance of the S&P… Read More ›
Yield Curve Reaction to the Fed’s Interest Rate Decision

By Ivan V. Sichkar on November 13, 2019 • ( 0 )

The Fed and its monetary policy have effect on the entire yield curve; the economy and the stock market. By the decision to cut federal funds rate, the Fed signals increased risk of economic slowdown and lower inflation. Investors rush to safety and buy long-term treasury bonds. The entire yield curve shifts down. Lower interest rates are very beneficial to homeowners, consumers, businesses, overall economy and the stock market.
Forecasting the Future Standard & Poor’s 500 Index for the Year-End 2019

By Ivan V. Sichkar on February 19, 2019 • ( 0 )

Year 2019 could be a very good year for investors. The forecast model predicts the SP 500 Index to closed between 2,891 and 2,906 at the end of the year 2019. This represents the return between 15.36% and 15.96% for the year 2019. If this forecast is correct, the year 2019 could be a very good year for investors.
Should you Buy or should you Rent a House?

By Ivan V. Sichkar on October 29, 2018 • ( 0 )

There are many reasons for owning a home, but making money on your real estate purchase should not be your main reason to buy. In some cases, owning a home can be more expensive than renting one. Owning a home… Read More ›
Diversification Benefits of Gold, Oil and the US Treasuries to the S&P500 Index during the Economic Business Cycle

By Ivan V. Sichkar on October 16, 2018 • ( 0 )

Gold, Oil, and the US Treasuries provide different diversification benefits when combined with the S&P500 Index. Correlation of Gold prices to the stock market remains low in Bull and Bear markets. Gold provides consistent diversification benefit to the stock portfolio…. Read More ›
Structural Wage Stagnation Causes Economic Weakness

By Ivan V. Sichkar on July 21, 2018 • ( 0 )

The US economy has a structural wage stagnation. For the last 34 years, wages have been growing at the effective real annual rate of 0.51%. Consumers who rely on salary alone, cannot increase discretionary spending too much. As discretionary spending declines, economic growth will slow down. This creates a risk for the next economic recession.
Forecasting the Future Standard & Poor’s 500 Index for the Year-End 2018

By Ivan V. Sichkar on January 29, 2018 • ( 0 )

This is my sixth annual forecast of the S&P 500 Index return for the year. It is based on the simple linear regression model. The model uses Gross Domestic Product (GDP) as explanatory variable to the performance of the S&P… Read More ›
Investors Cause Yield Curve to Invert

By Ivan V. Sichkar on September 4, 2017 • ( 0 )

On one side, the Fed pushes short-term yields higher. On the other side, strong demand from investors pushes long-term yields lower. Investors may demand more long-term US government bonds in the coming years causing the yield curve to turn negative or to invert
Fed Makes Yield Curve Look Flat

By Ivan V. Sichkar on August 25, 2017 • ( 0 )

The yield curve is likely to continue to flatten. The Fed has a strong control over the short term rates through its FOMC policies: setting the federal funds rate and by purchasing US treasuries. The long-term yields are out of the Fed’s control
Forecasting the Future S&P 500 Index for the Year-End 2017

By Ivan V. Sichkar on January 11, 2017 • ( 0 )

Based on the statistical analysis and the forecast using GDP and S&P 500 data, I expect the S&P 500 Index to close at 2,375 on December 29, 2017. That is a potential annual upside of 6.1% from the closing price of 2,238 on December 30, 2016.
Forecasting the Future S&P 500 Index for the Year-End 2016

By Ivan V. Sichkar on December 28, 2015 • ( 0 )

As a holiday tradition at ECNFIN.com, I forecast the S&P500 Index closing price one year from now. Based on the statistical analysis and forecast described in detail further in this article, I expect the S&P 500 Index to close between… Read More ›
Yield Spread Effect on Bond and Equity Markets

By Ivan V. Sichkar on May 31, 2015 • ( 0 )

What will happen to fixed income and equity markets when the Fed starts raising its short-term interest rate? History shows that the Fed does not have a strong influence on long-term rates. Usually, when the Fed decides to raise its… Read More ›

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