Why Market Volatility May be Good
The old adage, buy low – sell high, is very difficult to do when market volatility is low, as it has been for a long time. It’s very difficult to find an entry point for a position in a company you like when its stock price seemingly rises month after month. Market Volatility changes that. Weaker companies or weaker stocks tend to correct further than stronger ones. Having the ability to differentiate between good stocks and weaker stocks is very difficult unless volatility shakes things up.
Recent market activity has allowed dozens of really solid companies stock prices to approach their 50 and 200 day moving averages; which may provide a good opportunity to initiate or add to a position in a company you like.
If you step back from watching the latest headlines on TV and look at the bigger picture, you’ll probably find that volatility can be a real asset in building a long-term portfolio.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Past performance may not be indicative of future results.