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Katherine Ross [00:06:24]
And we you say to expect volatility against a backdrop of high valuations can you explain that a little bit.
Nicole Webb [00:06:32]
Yeah, I mean I hate quoting people but sometimes quoting Warren Buffett is really fun. I completely agree. To paraphrase him when the liquidity tides go out you see the naked swimmers. And that is where we are. We created a lot of liquidity in the global markets. With that we created a cushion where volatility wasn't necessary. Not so much that wasn't necessary but it certainly got people to invest. People chased yield that wasn't present in the interest rate market. And it led to the demand for value equities or dividend and growth stocks. So with that now we think as that wave of liquidity goes out as the tide retreats there is going to be more room in the marketplace for volatility. And I think we as we as investors have to remember that volatility doesn't necessarily mean that the markets are not going to perform in a positive way. It means that it's going to be the reversion to something more normal in terms of the activity that we see intra day. Working again with retail clients, I think it's interesting because they want to blame a lot of this volatility on high frequency trading. Again my message there is that high frequency trading is not going to change the actual fundamentals. What it does change is what's happening intraday when we watch the markets move the volume that's moving. But the fundamentals are what we need to stay focused on. And those don't change based on the amount of trading activity intra day.
Katherine Ross [00:08:11]
All right Nicole, thank you for joining me.

Here's why we might be seeing more volatility in the markets. 

Nicole Webb, financial adviser at Wealth Enhancement Group, discussed why--when the liquidity retreats--the markets may see more volatility.

"Yeah, I mean I hate quoting people but sometimes quoting Warren Buffett is really fun. I completely agree. To paraphrase him when the liquidity tides go out you see the naked swimmers. And that is where we are. We created a lot of liquidity in the global markets. With that we created a cushion where volatility wasn't necessary. Not so much that wasn't necessary, but it certainly got people to invest. People chased yield that wasn't present in the interest rate market. And it led to the demand for value equities or dividend and growth stocks. So with that now we think as that wave of liquidity goes out as the tide retreats there is going to be more room in the marketplace for volatility," said Webb. 

"And I think we as we as investors have to remember that volatility doesn't necessarily mean that the markets are not going to perform in a positive way. It means that it's going to be the reversion to something more normal in terms of the activity that we see intra-day," said Webb. "Working again with retail clients, I think it's interesting because they want to blame a lot of this volatility on high frequency trading. Again my message there is that high frequency trading is not going to change the actual fundamentals. What it does change is what's happening intra-day when we watch the markets move the volume that's moving. But the fundamentals are what we need to stay focused on. And those don't change based on the amount of trading activity intra-day."

Webb also covered earnings, retail and what to expect in the markets. You can watch the full interview here.

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