Facing Market Volatility
Allegedly, when asked how the markets will perform, banker J.P. Morgan replied: “Young man, I believe the market is going to fluctuate.” Market volatility will always be inevitable. However, fluctuations are not always caused by changes in a company’s performance–what really affects the long-term value of your holdings. Geopolitics, new government legislation, natural disasters, and even politicians’ tweets can affect market valuations. It is important to not let day to day changes in the market to cause you to abandon a long-term investing strategy as long as your reasons for buying the stock in the first place, the investment thesis still holds true. Sometimes, A volatile market can even be a good opportunity to add undervalued stocks to your portfolio at a discounted price.
Nowadays, we are constantly being flooded with information. Although we should stay up-to-date with current events, we should learn to be able to discern relevant information from background noise.
Bellaire High School, Texas