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Jim Parker's Coffee Break: Dealing with Volatility
Break: Dealing with Volatility
Financial markets have become a little more volatile
recently. Looking for a cause, commentators variously cite US-China
trade tensions or Brexit or interest rate uncertainty. Whatever the
reason, these can be challenging times for investors. While it’s pointless to speculate, one thing is
certain: Constantly checking the news can make it even harder to
withstand volatility. In Coffee Break this week, we share some
useful long-term perspectives on dealing with the ups and downs.
Survey after survey find the
evidence is clear. Most people, in trying to avoid the effects
of market volatility, tend to make it worse for themselves.
They buy high, sell low, lose money in trading costs, and take
more risk than they need to. In fact, most people don’t even
get the capital market rate of return.
Doing well as a long-term
investor often boils down to avoiding doing something stupid,
particularly when markets are volatile. https://nyti.ms/2GLRCAq
If there is anyone worth
listening to on how markets work, it’s Nobel Prize-winning
financial economist Eugene Fama. Known for his work on how hard
it is to outguess the market, Fama says while volatility can be
unsettling, the best approach is to stay focused on your
long-term goals. Check out this short video.
Unnerved by the volatility in
markets? Most people would be better off if they just didn’t
look at the news, says Nobel laureate. http://bit.ly/2GMoCZv
Increasing market volatility
is essentially an expression of uncertainty. But unless you
have information that no-one else is privy to, you are unlikely
to get an edge by trying to time your entry and exit points.
For those still anxious, Jim Parker provides seven simple
lessons to help you live through the volatility:
Unnerved by financial market
volatility? Here are seven simple lessons to keep in mind
during the tough times.
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