Investors Guide To Surviving Volatility In The Stock Market

It’s back!!! After well over a year of a smooth ride in the stock market, volatility is back with a vengeance. Even on days where the market closes down a few points, a closer look shows that the market swung wildly throughout the day and covered many hundred if not thousand of points.

To be honest, I don’t remember wild swings of volatility like this since the summer of 2011. Back then I was working for a high net worth planning firm and we were talking investors off the edge of the cliff.

Seeing as how many investors are feeling similar feelings today, I decided it would be a good time to help clear the air and put some things into perspective.

Your Guide To Surviving Volatility In The Stock Market

Recently I wrote about how we are headed for a bear market. However, I don’t think we are entering in one yet. I feel right now there are other factors at play. These include the following:

Overall, the market was due for a pullback. It seemed like every trading day in January, the market was only rising. So it is only natural that eventually, the market was going to fall.

It’s just that many didn’t think this type of volatility was going to happen so soon. So here are some things to keep in mind.

#1. Rising Interest Rates Change Plans

With interest rates hovering at near record lows, many investors were investing in safe stocks like utilities to earn a higher yield. But once interest rates began to rise, investors started to sell these stocks and move into less risky investments.

Add with the belief now of at least 3 more rate hikes this year, more investors are starting to sell.

#2. The Market Can’t Rise Forever

As I noted, the market was primarily rising. It needed to fall back and reset. And that is what it did. But here is why there was a dramatic drop in the last few sessions.