Many factors may be attributed to the recent market volatility; the speculation of higher inflation, rising interest rates, retail investors entering the market, automated computer trading, or the perception that we need to do something because of the media headlines. Whatever the reason, we know the financial markets are always in motion. Such volatile market behavior is inevitable and altogether normal, but also healthy for the markets.
Corrections are normal—their absence was abnormal. The downside risk: Down markets make investors nervous enough to make emotional decisions, not rational ones. The upside opportunity: By staying calm and carrying on, the managers we invest in can buy their best ideas at discounts rather than at unrelenting premiums. For long-term investors like you, near-term disruptions create long-term wealth.
Here are some basic principles for managing market volatility per Fidelity Investments:
- Don't bail out at the first signs of a declining market: The markets are resilient. Sure, there have been periods when the market has delivered losses. But over the long term, the stock market has trended upward, recovering again and again from the disruptive, but ultimately short-term, worries of economic crises and major world events.
- Do have a plan for investing through market fluctuations: Take advantage of your resources. Working with a trusted financial adviser can be your best resource when it comes to establishing and investing plan that helps you focus on the long term. We help our clients manage volatility, meet their specific financial needs so they can achieve their long-term goals.
Market volatility can also bring opportunity:
Don't try to manage volatility on your own. Please call us today if you have specific questions or concerns relating to market volatility or would be interested in meeting.