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Your frequently asked questions on volatility answered

Historically, down markets have rebounded — these strategies can help you manage risks through today’s ups and downs, says our Chief Investment Office

VOLATILITY IS ALWAYS A CHALLENGE for investors, and so far in 2022 it has been nonstop. What’s going on? “We believe that markets are undergoing some big shifts right now as they struggle to price in inflation and come to terms with slower growth,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “But we also believe that once inflation peaks, the volatility should ease and positive profits growth should eventually return.”


In the meantime, what can investors consider doing? “During periods of sharp volatility, markets try to anticipate and react to headlines and events. But that doesn’t mean you should,” Hyzy says. Rather than attempting to keep pace with daily fluctuations, review your long-term investment strategy, and try to remember that as a long-term investor, time is on your side. As uncomfortable as volatility can be, “what history tells us is that staying invested for the long term has paid off,” Hyzy adds.

Below, he and other members of the Chief Investment Office offer insights to help you put this year’s sometimes extreme market ups and downs in perspective, as they answer five questions advisors have been hearing from clients around the country.


Hit + after each question to see their answers and explore more resources.


Q. Should I sell some or all of my equities and revert to cash until this volatility subsides?

Q: With so many geopolitical risks right now, is it a good idea to own international stocks?

Q: What do rising interest rates mean for my fixed income investments?

Q: Why have stock and bond values been going down together?

Q: What can I do to better manage risk in my portfolio going forward?

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1 BofA Global Research, January 2022

2 Chief Investment Office; Yardeni Research; Bloomberg. Data as of January 31, 2022.

3 S&P, BofA US Equity & Quant Strategy. 1930 - June 1, 2022

4 IMF, 2021; MSCI, 2021; World Bank, 2020.

5 MSCI EAFE Net TR; MSCI Emerging Markets Net TR; CIO Inflation ABCs; Portfolio Strategy, April 2022.


Important Disclosures


Opinions are as 06/27/22 and are subject to change.


This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.


The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).


BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).


Investments have varying degrees of risk. Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad.  Bonds are subject to interest rate, inflation and credit risks.  Treasury bills are less volatile than longer-term fixed income securities and are guaranteed as to timely payment of principal and interest by the U.S. government.  Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risk related to renting properties, such as rental defaults. There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors.


Keep in mind that dollar cost averaging cannot guarantee a profit or prevent a loss. Since such an investment plan involves continual investment in securities regardless of fluctuating price levels, you should consider your willingness to continue purchasing during periods of high or low price levels.


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