Jim Parker's Coffee Break: Dealing with Volatility

Coffee 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. Shooting Yourself in the Foot 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 The View from a Nobel Laureate 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 Seven Simple Lessons 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. DFA Australia Limited    Level 43, 1 Macquarie Place Sydney NSW 2000 Australia    T +61 2 8336 7100 View Online      au.dimensional.com This section may provide links to the sites of independent third parties which contain information, articles and other material prepared by persons who are not employees or representatives of DFA Australia. These links are for your convenience only. These third parties are not affiliated with DFA Australia, and DFA Australia does not control or endorse and is not responsible for any information, opinions, representations or offers on these linked sites. DFA Australia is not responsible for the contents or accuracy of this material, and the opinions expressed in this material should not be taken to be the opinions of DFA Australia.