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Merrill advises customers to take these steps against a background of higher volatility


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The volatility that has gripped the markets for weeks has prompted some investors to ask, “Is this the bottom?”

But the expectation of this market low may be elusive.

“There’s no bottom line,” said Chris Heathie, chief investment officer of Merrill and Bank of America Private Bank. “We are in the midst of a bottomless process.”

That could be resolved over time, Hyzy added.

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In addition, the two catalysts can help change investor sentiment for the better.

The first is the peak of inflation. “We expect this to happen in the next couple of months,” Heezy said, and the second will be a strong profit in 2023.

“If these two things come together, the investor’s psychology will improve in the next 12-18 months,” Heezy said.

Inflation data published on Friday pointed to a potentially slow rise in prices, which helps send promotions above south and position Dow Jones Industrial Average to possibly interrupt an eight-week losing streak.

One reason why this bout of volatility has worried market analysts is that both stocks and bonds have occurred more than usual. Heezy noted that the volatility of bonds and stocks has not been so closely correlated since 1994.

“It’s new to a variety of new investors, and it’s a story that a more experienced investor didn’t want to see again,” Gizi said.

Ability to restore balance

For investors and advisors the present moment provides an opportunity to reconsider goals and objectives.

“If your time horizon is at least three years … the bottom-up process, which we expect to take place in the coming months, is an opportunity to restore balance in the summer,” Gizi said.

Investors with shorter time horizons also need to reconsider their goals.

“You need to make sure you review your risk profile and adjust the course where you need to,” Heezy said.

A balanced investment process should also include broad diversification by asset class, in addition to reconciling goals and time horizons, according to Keith Glenfield, head of investment decisions at Merrill and Bank of America Private Bank.

Opportunistic moves

Higher market volatility has also enabled advisors and their clients to reap the benefits of collecting tax losses, causing some securities to be sold at a loss to offset capital gains tax on other securities sold.

The firm provides these services through a suite of tax management services that it made available to the firm’s consultants last summer.

According to Glenfield, once a client decides to enroll in services provided under a firm’s fiduciary program, consultants are entitled to act on their behalf.

Advisors to these clients may be looking for opportunities to collect tax losses as they arise, rather than waiting until the end of the year.

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Angela Weiss | AFP | Getty Images

“If you did it at the end of the year, you don’t know where your portfolio or specific positions will be at that point,” Glenfield said.

“It allows you to take advantage of the peaks and valleys throughout the year,” he said.

Other features include effective tax rebalancing, quarterly loss collection, and investment strategies that emphasize tax approaches.

According to Glenfield, the level of activity for new proposals is increasing every week.

“We are pleased with the customer’s reaction,” he said.

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