The Roller Coaster called: Stock Market
Over the course of the last decade we have been ascending in what is one of the most incredible bull markets in history. Investors were cashing in on record breaking returns and all was good in the world. Many anticipated riding this wave of success well into 2020, however, the market had other plans. Over the last 3-months we have experienced unprecedented volatility and has left many investors with more questions than answers. Market volatility is nothing new, but after experiencing a pure bull market the last 10-years, it is important to revisit the fundamentals as a reminder of how you can be a prudent investor during these crazy times.
What is market volatility?
Simply put, volatility is a statistical measure of the tendency of a market or security to rise or fall sharply within a short period of time.
What causes market volatility?
Market volatility is often result from an imbalance of trade orders, economic releases (politics, COVID-19), company news (earnings reports), recommendations from analysts, etc. This all boils down to what is called “investor sentiment”. Sentiment is the general mood or reaction among investors regarding a particular market or asset.
How to invest in a volatile market?
Do not get overly concerned about the short-term fluctuations in value. This is always easier said than done, but wise investors look at their portfolios from year-to-year and not week-to-week.
The Bottom Line
Investors need to be aware of any potential risks associated with market volatility. If you are concerned with your current plan, how your portfolio is protected against market volatility, or have other questions please contact us!
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