Stock market volatility is the dramatic and unpredictable price changes that can occur in a stock or other investment. Markets can be volatile for days, weeks or months. Volatility is a normal part of the investing process, and it may create opportunities for you to find good value in areas that have experienced a downturn. Your financial advisor can help you analyze specific risks and identify potential opportunities during a volatile market.
While a volatile market can make investors feel anxious, it’s important to remember that periods of decline are typically followed by periods of growth. When markets are down, investors may be tempted to sell investments to preserve their savings. This can lead to emotional decisions that may hurt returns over time. Instead, talk to your financial advisor about implementing strategies that minimize risk and volatility as you approach retirement or other goals.
Many factors can drive stock market volatility, from pending trade wars to iffy GDP growth. But it’s often hard to know what’s really behind the big swings in a day. A new study uses newspaper articles to investigate which factors are truly responsible for the ups and downs in the markets. Researchers looked at articles that included references to a particular stock market factor, such as the will-they-or-won’t-they Trump administration tariffs or a possible interest rate increase. They then used a sophisticated model to determine which factors were most likely to be linked to stock market volatility.