--- title: "Monthly Market Risk Update: November 2021" description: While economic fundamentals improved and markets bounced, Commonwealth CIO Brad McMillan sees potential volatility ahead in his Monthly Market Risk Update. image: https://blog.commonwealth.com/hubfs/Rebrand-Blog-Images/IMO-images/Monthly-Risk/monthly-update-a.jpg --- [![The Independent Market Observer](https://blog.commonwealth.com/hubfs/IMO-Title-1.png "The Independent Market Observer")](https://blog.commonwealth.com/independent-market-observer) [![Commonwealth Financial Network](https://blog.commonwealth.com/hubfs/lockup_citron-1.png "Commonwealth Financial Network")](https://www.commonwealth.com/) - [Home](https://blog.commonwealth.com/independent-market-observer) - [About](https://learn.commonwealth.com/about/) ### ![print this page](https://blog.commonwealth.com/hs-fs/file-1376458285-gif/images/print.gif)Print # [Monthly Market Risk Update: November 2021](https://blog.commonwealth.com/independent-market-observer/monthly-market-risk-update-november-2021) Posted by [Brad McMillan, CFA®, CFP®](https://blog.commonwealth.com/independent-market-observer/author/brad-mcmillan-cfa-caia-mai) Find me on: [LinkedIn](https://www.linkedin.com/in/bradmcmillancfa) [Twitter](https://x.com/BradMcMillanCFA) This entry was posted on Nov 11, 2021, 3:39:19 PM and tagged [Market Updates](https://blog.commonwealth.com/independent-market-observer/topic/market-updates) [Leave a comment](https://blog.commonwealth.com/independent-market-observer/monthly-market-risk-update-november-2021#comments-listing) ![monthly-update-a](https://blog.commonwealth.com/hs-fs/hubfs/Rebrand-Blog-Images/IMO-images/Monthly-Risk/monthly-update-a.jpg?width=300&name=monthly-update-a.jpg)My colleague [Sam Millette](https://blog.commonwealth.com/independent-market-observer/author/sam-millette), manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam! After a difficult September, markets bounced back strongly in October. Here in the U.S., all three major indices were up significantly, with the Nasdaq and the S&P 500 gaining more than 7 percent and the Dow rising almost 6 percent. Developed markets showed a smaller gain, at almost 2.5 percent, and emerging markets eked out a 1 percent gain. While stocks did well, bonds had another bad month, dropping slightly as interest rates rose. Will those gains continue? Let’s take a look at the risks. ##### Recession Risk Recessions are strongly associated with market drawdowns; in fact, 8 of 10 bear markets have occurred during recessions. The National Bureau of Economic Research, which declared that a recession started last February when markets plunged, recently announced that it ended shortly thereafter. Despite that and the ongoing expansion, economic risks remain. The primary risk is a slowing recovery, as evidenced by a slowdown in job growth and a drop in consumer confidence in September. On the whole, the economic recovery continues, with some acceleration seen in October. But given the remaining risks, we have kept the [economic risk level](https://blog.commonwealth.com/independent-market-observer/economic-risk-factor-update-november-2021) at a yellow light for now. Although the most likely path forward is continued recovery, the decrease in economic activity in September signals that the economic risk is still material despite October’s improvement. ##### Economic Shock Risk One major systemic factor is the price of money, otherwise known as interest rates. They drive the economy and financial markets—and, historically, have been able to derail them. Rates have been causal factors in previous bear markets and deserve close attention. Risk factor #1: The yield curve (10-year minus 3-month Treasury rates). We cover interest rates in the economic update, but they warrant a look here as well. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/marketrisk11_1.jpg?width=500&name=marketrisk11_1.jpg) The yield curve steepened in October for the third consecutive month. This result was primarily due to rising long-term interest rates, as the 10-year Treasury yield increased from 1.52 percent at the end of September to 1.59 percent at the end of October. The three-month Treasury yield rose from 0.04 percent at the end of September to 0.06 percent at the end of October. Although short-term rates are expected to remain low until at least 2023, longer-term rates rose during the month—partially in response to the Fed’s September meeting, at which the central bank indicated it may start tapering asset purchases by the end of the year. This increase brought long-term yields closer to pre-pandemic levels and the recent highs we saw in March and April of this year. Although the rise in long-term yields during the month is a sign of a return to more historically normal yield levels, the rising yields do pose a threat for equity valuations, as we saw in September (and earlier in the year, when rising long-term yields contributed to equity market volatility). Given that long-term yields are approaching 2021 highs, we have kept this indicator at a yellow light. Signal: Yellow light ##### Market Risk Beyond the economy, we can also learn quite a bit by examining the market itself. For our purposes, two things are important: 1. To recognize which factors signal high risk 2. To try to determine when those factors signal that the risk has become an immediate—rather than theoretical—concern Risk factor #1: Valuation levels. When assessing valuations, we find longer-term metrics (particularly the cyclically adjusted Shiller P/E or price-to-earnings ratio, which looks at average earnings over the past 10 years) to be the most useful in determining overall risk. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/marketrisk11_2.jpg?width=500&name=marketrisk11_2.jpg) Please note: Because of data limitations, this is the same chart that was used in last month’s update. Valuations continued to rise in September, as the Shiller CAPE ratio rose from 38.09 in August to 38.34 in September. This marks four consecutive months with rising equity market valuations, and it left the ratio at its highest level since late 2000. Even though the Shiller CAPE ratio is a good risk indicator, it’s a terrible timing indicator. To get a better sense of immediate risk, let’s turn to the 10-month change in valuations. Looking at changes rather than absolute levels gives a sense of the immediate risk level because turning points often coincide with changes in market trends. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/Charts/marketrisk11_3.jpg?width=500&name=marketrisk11_3.jpg) Above, you can see that when valuations roll over—with the change dropping below zero over a 10-month or 200-day period—the market itself typically drops shortly thereafter. This relationship was held at the start of the pandemic, as valuations and the index rolled over before rebounding. On a 10-month basis, valuations rose 18.1 percent in September, down from the 21.8 percent increase we saw in August. Given the historically high valuation levels, we have kept this indicator as a yellow light for now, despite the fact that valuation changes have remained outside the danger zone since May 2020. Signal: Yellow light Risk factor #2: Margin debt. Another indicator of potential trouble is margin debt. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/Charts/marketrisk11_4.jpg?width=500&name=marketrisk11_4.jpg) Debt levels as a percentage of market capitalization increased notably at the start of the pandemic and throughout 2020. Since then, we have seen margin debt first decline but more recently rebound as a percentage of market capitalization. Margin debt increased in August and September, and the overall level of margin debt remains high on a historical basis. The high level of debt associated with the market is a risk factor on its own but not necessarily an immediate one. For immediate risk, changes in margin debt over a longer period are a better indicator than the level of that debt. Consistent with this, if we look at the change over time, spikes in debt levels typically precede a drawdown. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/Charts/marketrisk11_5.jpg?width=500&name=marketrisk11_5.jpg) Please note: Margin debt increased 4.15 percent year-over-year in September. As you can see in the chart above, margin debt as a percentage of market capitalization increased by 5.2 percent in August after a 1.2 percent decline in July. Despite this increase, the year-over-year growth rate remains well below the recent high of 32.5 percent we saw in January. Although the year-over-year growth figure remains below highs from earlier in the year, the increasing margin debt as a percentage of market capitalization is worth monitoring, given the historically high level of margin debt. We have kept this indicator at a yellow light for now. Signal: Yellow light Risk factor #3: Technical factors. A good way to track overall market trends is to review the current level versus recent performance. Two metrics we follow are the 200-day and 400-day moving averages. We start to pay attention when a market breaks through its 200-day average, and a breakthrough of the 400-day average often signals further trouble ahead. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/Charts/marketrisk11_6.jpg?width=500&name=marketrisk11_6.jpg) Technical factors remained supportive for equity markets throughout October. The S&P 500, which managed to break above its 200-day moving average at the end of May 2020, has finished above trend every month since. The Dow Jones Industrial Average and Nasdaq Composite have seen similar technical support. This marks 16 consecutive months with all three major U.S. indices finishing above trend. The 200-day trend line is an important technical signal that is widely followed by market participants, as prolonged breaks above or below could indicate a longer-term shift in investor sentiment for an index. The 400-day trend line is also a reliable indicator of a change in trend. The continued technical support for markets despite volatility during the month was encouraging, so we have left this signal at a green light. Signal: Green light Risk factor #4: Market complacency. This is a recently added risk factor that aims to capture a standardized measure of market complacency across time. Complacency can be an uncertain term, so this chart identifies and combines two common ways to measure complacency: valuations and volatility. For the valuation component of the index, we are using the forward-looking price-to-earnings ratio for the S&P 500 over the next 12 months. This gives an idea of how much investors are willing to pay for companies based on their anticipated earnings. Typically, when valuations are high, it signals investors are confident and potentially complacent. For volatility, we have used the monthly average level for the VIX, a stock market volatility index. When volatility for the S&P 500 is high, the VIX rises, which would signal less complacency. By combining the two metrics in the chart below, we see periods where high valuations and low volatility have caused peaks, such as 2000, 2006–2007, and 2017. We saw market drawdowns within roughly one year following each of these peaks. ![market risk](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/Charts/marketrisk11_7.jpg?width=500&name=marketrisk11_7.jpg) *Source: Haver Analytics, FactSet* Please note: In October, the VIX averaged 17.87, the forward-looking P/E ratio was 21.4, and the index value was 1.2. Looking at the current chart, market complacency rose again in October. The average VIX reading decreased from 19.8 in September to 17.9. The forward-looking P/E ratio for the S&P 500, on the other hand, rose from 20.5 to 21.3 during the month. The combination of lower volatility and higher forward-looking valuations caused the market complacency index to rise back to 1.2, returning the index to recent highs. Readings exceeding 1.2 have historically been a signal that market complacency may be at concerning levels; with the index is back at this level, it’s a potential signal of caution. We have reverted this indicator to a yellow light to reflect the change. Signal: Yellow light ##### Conclusion: October Recovery, but Risks Persist Economic fundamentals showed a substantial improvement in October, reducing economic market risks. We saw employment data improve markedly as consumer confidence stabilized, which is a good sign for future spending growth. It should be noted that, though the pace of the economic recovery improved, medical and economic risks are still material. Markets bounced significantly during October on the improved data, reaching new highs. Investor worries subsided on better medical and economic news, despite remaining concerns around supply chains and inflation. Given that recovery and improved fundamentals, a continued market recovery remains the most likely path forward. Ultimately, the path back to a more normal economic environment will likely be long, and we can expect setbacks along the way (as we saw in September). Given that the indicators we track in this update remained at a yellow light or better during the month, we have left the overall market risk level at a yellow light for now, but the recent slowdown in medical improvement could lead to further volatility and downgrades in the months ahead. ![yellow_light](https://blog.commonwealth.com/hs-fs/hubfs/Brad_Images_IMO_Blog/2017/yellow_light.jpg?width=300&name=yellow_light.jpg)   - [Tweet](https://twitter.com/share) ### Subscribe via Email ![TMO_IMO_615x408_sidebar](https://blog.commonwealth.com/hs-fs/hubfs/TMO_IMO_615x408_sidebar.png?width=1033&height=686&name=TMO_IMO_615x408_sidebar.png "TMO_IMO_615x408_sidebar") [Episode 20](https://vimeo.com/1201911815/0f4f028be9?share=copy&fl=sv&fe=ci) June 17, 2026 [Episode 19](https://vimeo.com/1191658257/1b43ce84dd?share=copy&fl=sv&fe=ci) May 13, 2026 [Episode 18](https://vimeo.com/1183174918/e227cf7d80?share=copy&fl=sv&fe=ci) April 15, 2026 [Episode 17](https://vimeo.com/1174554734/636f0f7aba?share=copy&fl=sv&fe=ci) March 18, 2026 [Episode 16](https://vimeo.com/1163757312/bc2f802d74?share=copy&fl=sv&fe=ci) February 11, 2026 [More](https://learn.commonwealth.com/monthly-media-placements) [![Insights_CTA_IMO_233x400-1](https://no-cache.hubspot.com/cta/default/295024/interactive-187935228457.png)](https://blog.commonwealth.com/hs/cta/wi/redirect?encryptedPayload=AVxigLIXWy1T2eR0la8LhrOvblbDoNXlQvuySGWREQan0LlKr5XTS13roD8mDgGP%2B43kQBP21vOnPpQLohhg%2BkDg%2Fs%2F9zjEtcXdUPfIcl7iCZaH1gFKWEjJQCjdx3xcYkg%2FXM2nSWRVxHgIAanXrbZfFs0XC61BX9%2BW2D5t1pNzfBm5yvgbayUliVew%3D&webInteractiveContentId=187935228457&portalId=295024) ### Hot Topics Select Category Ask Brad Commentary Economic Risk Factor Updates Economics Lessons Market Thoughts Videos In the News Investing Market Updates On My Bookshelf Politics and the Economy [![New Call-to-action](https://no-cache.hubspot.com/cta/default/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf.png)](https://cta-redirect.hubspot.com/cta/redirect/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf) ### Archives - [July 2026 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2026/07) - [June 2026 (2)](https://blog.commonwealth.com/independent-market-observer/archive/2026/06) - [May 2026 (2)](https://blog.commonwealth.com/independent-market-observer/archive/2026/05) - [April 2026 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2026/04) - [March 2026 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2026/03) - [February 2026 (4)](https://blog.commonwealth.com/independent-market-observer/archive/2026/02) - [January 2026 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2026/01) - [December 2025 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2025/12) - [November 2025 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2025/11) - [October 2025 (4)](https://blog.commonwealth.com/independent-market-observer/archive/2025/10) - [September 2025 (4)](https://blog.commonwealth.com/independent-market-observer/archive/2025/09) - [August 2025 (3)](https://blog.commonwealth.com/independent-market-observer/archive/2025/08) - [July 2025 (4)](https://blog.commonwealth.com/independent-market-observer/archive/2025/07) - [June 2025 (5)](https://blog.commonwealth.com/independent-market-observer/archive/2025/06) - [May 2025 (5)](https://blog.commonwealth.com/independent-market-observer/archive/2025/05) - [April 2025 (7)](https://blog.commonwealth.com/independent-market-observer/archive/2025/04) - [March 2025 (5)](https://blog.commonwealth.com/independent-market-observer/archive/2025/03) - [February 2025 (2)](https://blog.commonwealth.com/independent-market-observer/archive/2025/02) - [January 2025 (1)](https://blog.commonwealth.com/independent-market-observer/archive/2025/01) - [December 2024 (2)](https://blog.commonwealth.com/independent-market-observer/archive/2024/12) - [November 2024 (2)](https://blog.commonwealth.com/independent-market-observer/archive/2024/11) - [October 2024 (9)](https://blog.commonwealth.com/independent-market-observer/archive/2024/10) - [September 2024 (12)](https://blog.commonwealth.com/independent-market-observer/archive/2024/09) - [August 2024 (11)](https://blog.commonwealth.com/independent-market-observer/archive/2024/08) - [July 2024 (15)](https://blog.commonwealth.com/independent-market-observer/archive/2024/07) - [June 2024 (13)](https://blog.commonwealth.com/independent-market-observer/archive/2024/06) - [May 2024 (11)](https://blog.commonwealth.com/independent-market-observer/archive/2024/05) - [April 2024 (13)](https://blog.commonwealth.com/independent-market-observer/archive/2024/04) - [March 2024 (13)](https://blog.commonwealth.com/independent-market-observer/archive/2024/03) - [February 2024 (11)](https://blog.commonwealth.com/independent-market-observer/archive/2024/02) - [January 2024 (13)](https://blog.commonwealth.com/independent-market-observer/archive/2024/01) - [December 2023 (15)](https://blog.commonwealth.com/independent-market-observer/archive/2023/12) - [November 2023 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2023/11) - [October 2023 (17)](https://blog.commonwealth.com/independent-market-observer/archive/2023/10) - [September 2023 (14)](https://blog.commonwealth.com/independent-market-observer/archive/2023/09) - [August 2023 (16)](https://blog.commonwealth.com/independent-market-observer/archive/2023/08) - [July 2023 (15)](https://blog.commonwealth.com/independent-market-observer/archive/2023/07) - [June 2023 (14)](https://blog.commonwealth.com/independent-market-observer/archive/2023/06) - [May 2023 (16)](https://blog.commonwealth.com/independent-market-observer/archive/2023/05) - [April 2023 (13)](https://blog.commonwealth.com/independent-market-observer/archive/2023/04) - [March 2023 (17)](https://blog.commonwealth.com/independent-market-observer/archive/2023/03) - [February 2023 (14)](https://blog.commonwealth.com/independent-market-observer/archive/2023/02) - [January 2023 (16)](https://blog.commonwealth.com/independent-market-observer/archive/2023/01) - [December 2022 (15)](https://blog.commonwealth.com/independent-market-observer/archive/2022/12) - [November 2022 (14)](https://blog.commonwealth.com/independent-market-observer/archive/2022/11) - [October 2022 (17)](https://blog.commonwealth.com/independent-market-observer/archive/2022/10) - [September 2022 (14)](https://blog.commonwealth.com/independent-market-observer/archive/2022/09) - [August 2022 (17)](https://blog.commonwealth.com/independent-market-observer/archive/2022/08) - [July 2022 (18)](https://blog.commonwealth.com/independent-market-observer/archive/2022/07) - [June 2022 (15)](https://blog.commonwealth.com/independent-market-observer/archive/2022/06) - [May 2022 (17)](https://blog.commonwealth.com/independent-market-observer/archive/2022/05) - [April 2022 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2022/04) - [March 2022 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2022/03) - [February 2022 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2022/02) - [January 2022 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2022/01) - [December 2021 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2021/12) - [November 2021 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2021/11) - [October 2021 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2021/10) - [September 2021 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2021/09) - [August 2021 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2021/08) - [July 2021 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2021/07) - [June 2021 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2021/06) - [May 2021 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2021/05) - [April 2021 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2021/04) - [March 2021 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2021/03) - [February 2021 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2021/02) - [January 2021 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2021/01) - [December 2020 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2020/12) - [November 2020 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2020/11) - [October 2020 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2020/10) - [September 2020 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2020/09) - [August 2020 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2020/08) - [July 2020 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2020/07) - [June 2020 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2020/06) - [May 2020 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2020/05) - [April 2020 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2020/04) - [March 2020 (27)](https://blog.commonwealth.com/independent-market-observer/archive/2020/03) - [February 2020 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2020/02) - [January 2020 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2020/01) - [December 2019 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2019/12) - [November 2019 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2019/11) - [October 2019 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2019/10) - [September 2019 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2019/09) - [August 2019 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2019/08) - [July 2019 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2019/07) - [June 2019 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2019/06) - [May 2019 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2019/05) - [April 2019 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2019/04) - [March 2019 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2019/03) - [February 2019 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2019/02) - [January 2019 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2019/01) - [December 2018 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2018/12) - [November 2018 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2018/11) - [October 2018 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2018/10) - [September 2018 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2018/09) - [August 2018 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2018/08) - [July 2018 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2018/07) - [June 2018 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2018/06) - [May 2018 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2018/05) - [April 2018 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2018/04) - [March 2018 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2018/03) - [February 2018 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2018/02) - [January 2018 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2018/01) - [December 2017 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2017/12) - [November 2017 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2017/11) - [October 2017 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2017/10) - [September 2017 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2017/09) - [August 2017 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2017/08) - [July 2017 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2017/07) - [June 2017 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2017/06) - [May 2017 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2017/05) - [April 2017 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2017/04) - [March 2017 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2017/03) - [February 2017 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2017/02) - [January 2017 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2017/01) - [December 2016 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2016/12) - [November 2016 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2016/11) - [October 2016 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2016/10) - [September 2016 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2016/09) - [August 2016 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2016/08) - [July 2016 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2016/07) - [June 2016 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2016/06) - [May 2016 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2016/05) - [April 2016 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2016/04) - [March 2016 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2016/03) - [February 2016 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2016/02) - [January 2016 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2016/01) - [December 2015 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2015/12) - [November 2015 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2015/11) - [October 2015 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2015/10) - [September 2015 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2015/09) - [August 2015 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2015/08) - [July 2015 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2015/07) - [June 2015 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2015/06) - [May 2015 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2015/05) - [April 2015 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2015/04) - [March 2015 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2015/03) - [February 2015 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2015/02) - [January 2015 (21)](https://blog.commonwealth.com/independent-market-observer/archive/2015/01) - [December 2014 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2014/12) - [November 2014 (19)](https://blog.commonwealth.com/independent-market-observer/archive/2014/11) - [October 2014 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2014/10) - [September 2014 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2014/09) - [August 2014 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2014/08) - [July 2014 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2014/07) - [June 2014 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2014/06) - [May 2014 (25)](https://blog.commonwealth.com/independent-market-observer/archive/2014/05) - [April 2014 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2014/04) - [March 2014 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2014/03) - [February 2014 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2014/02) - [January 2014 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2014/01) - [December 2013 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2013/12) - [November 2013 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2013/11) - [October 2013 (27)](https://blog.commonwealth.com/independent-market-observer/archive/2013/10) - [September 2013 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2013/09) - [August 2013 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2013/08) - [July 2013 (23)](https://blog.commonwealth.com/independent-market-observer/archive/2013/07) - [June 2013 (22)](https://blog.commonwealth.com/independent-market-observer/archive/2013/06) - [May 2013 (26)](https://blog.commonwealth.com/independent-market-observer/archive/2013/05) - [April 2013 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2013/04) - [March 2013 (24)](https://blog.commonwealth.com/independent-market-observer/archive/2013/03) - [February 2013 (20)](https://blog.commonwealth.com/independent-market-observer/archive/2013/02) - [January 2013 (30)](https://blog.commonwealth.com/independent-market-observer/archive/2013/01) - [December 2012 (34)](https://blog.commonwealth.com/independent-market-observer/archive/2012/12) - [November 2012 (39)](https://blog.commonwealth.com/independent-market-observer/archive/2012/11) - [October 2012 (42)](https://blog.commonwealth.com/independent-market-observer/archive/2012/10) - [September 2012 (36)](https://blog.commonwealth.com/independent-market-observer/archive/2012/09) - [August 2012 (30)](https://blog.commonwealth.com/independent-market-observer/archive/2012/08) - [July 2012 (31)](https://blog.commonwealth.com/independent-market-observer/archive/2012/07) - [June 2012 (18)](https://blog.commonwealth.com/independent-market-observer/archive/2012/06) see all ### Subscribe - [RSS](https://blog.commonwealth.com/independent-market-observer/rss.xml) ### Disclosure The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index. The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The Russell 2000 is a market-capitalization weighted index, with dividends reinvested, that consists of the 2,000 smallest companies within the Russell 3000 Index. It is often used to track the performance of U.S. small market capitalization stocks. One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent. The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options. The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation. Member [FINRA](http://www.FINRA.org), [SIPC](http://www.SIPC.org) Please review our [Terms of Use](https://www.commonwealth.com/terms-of-use).  Commonwealth Financial Network® ![](https://www.facebook.com/tr?id=1808440502705240&ev=PageView&noscript=1)