Market Volatility and Mid Term Elections: What You Need to Know
Over the past couple of years, investors have gotten used to steady gains in the stock market. The comfort felt watching the consistently green ticker symbols move across your tv screen or opening statements to see mostly positive numbers may have fooled some into thinking this is all normal. Of course, we’ve had some recent dips, too, but mostly upswings in the stock market. Markets are volatile by nature and the most recent ups and downs we have been watching may come as a surprise for those who have forgotten the past, but this is what the stock market is all about.
The good news is, a down market can mean great opportunity for buyers. Hopefully, you have kept some cash on hand to dig back in when the market isn’t at its recent all time high. If not, don’t panic. If your time horizon is far enough off, chances are the market will come back before you need to withdraw money from your accounts. You haven't truly realized a loss until you have sold off the investments for a price lower than what you paid.
For those of you who were invested back in 2008-2009 when we saw the most substantial market losses in recent history, know how this typically plays out. Those who sold off in a panic or sold off due to an immediate need, may have not yet recovered, while those who kept emotions at bay and were able to stick it out likely have gotten back to where they were and then some.
If you are feeling anxious about market volatility call your advisor to discuss strategies to hedge against loss. There are plenty of options out there to balance your portfolio or even preserve your gains. With mid-term elections coming up, it is likely that market volatility will continue. Shifts in power can cause uneasiness among investors - for good reason. Depending on who has power of The House and The Senate, foreign and fiscal policy will be affected differently. Oddly enough, as elections near and then ultimately pass regardless of outcome, the market tends to balance off as uneasiness and uncertainty fade. So, while you may feel like you are on a rollercoaster ride, experts believe (and history shows) there is a good chance that the ride will slow to a comfortable glide as the year comes to an end.
The key to smart investing is to use logic as much as possible and try to keep emotions out of your decision making. Investors who fare the best long-term results are typically those who use a buy and hold strategy rather than trading based on attempting to time the market. So, if the ride is getting too scary, you may want to close your eyes, but don't jump! That is the beauty of having a good advisor who you trust. They will help keep you on track and help you make the best choices for your financial future.
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Due to volatility within the markets mentioned, opinions are subject to change without notice. Any opinions or forecasts contained herein reflect the subjective judgements and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial, inc. Investing is subject to risks including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.