“The constant lesson of history is the dominant role played by surprise. Just when we are most comfortable with an environment and come to believe we finally understand it, the ground shifts under our feet.”- Peter Bernstein
However, instead of worrying about market volatility, a wise investor will always be prepared for it and will think of strategies for dealing with market movements, i.e. its ups and downs.
How to deal with market volatility?
When market volatility strikes, here are the ways and strategies to cope with it-
- Stay Invested
It is very well understood that a sudden downfall in the market indices may lead to major implications. However, it is very important to hold on and stay invested. You can connect with your financial advisors and discuss about the time frame, goals and strategy to ensure that things are in place with your financial plan.
- Review your investment plan
When you observe market fluctuations, review your financial goal and check whether your long term and short term strategies are well in place. Re - determine your financial goals, if needed. Understand the situation and compare it with your investment strategies & check if any of them are needed to be revised.
The next step is to ensure that you do not abandon your investment journey abruptly and keep monitoring it regularly to ensure that you are on track.
- Diversify your Holdings
As the markets change, your portfolio must also change. In fact, market fluctuations provide a great opportunity to diversify your stock holdings and allocate your money into different asset classes. Stay diversified in your asset mix as much as possible to beat market volatility. For e.g.- debt markets tend to be stable when the equity indices are fluctuating and vice-versa.
- Learn more about stock markets and economic cycles
Market volatility is the best time to observe the stock market closely and understand its various aspects. To reduce the impact of market fluctuations on your investment decisions and your portfolio, consider how economic cycles have left an impact in the past. To conduct this study, you can compare both domestic and international markets to understand in detail how your stocks may perform over time. Based on this, it would be a good idea to diversify your portfolio into cyclical stocks during the right times.
- Embrace the volatility
The main motto of this blog is to convey that you must expect and accept the market fluctuations wholly. Sometimes, doing nothing is also an important part of the strategy and can play a vital role. It is a matter of fact that traders who wait and watch the game earn steady returns over a period of time. Thus, sometimes, it is best to adopt the “Do nothing” strategy.
In times of market volatility, get the much-needed opinion and perspective of investment professionals. Market volatility is the time when your emotions run high and it becomes difficult to trade in the online share market. In such a scenario, it is advisable to learn about the detailed aspects of share market online trading, fluctuations and the pattern of returns from an expert.
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