How to Invest during Periods of Volatility

How to Invest During
Periods of Volatility
By www.ProfitableInvestingTips.com

https://profitableinvestingtips.com/
profitable-investing-tips/how-to-
invest-in-volatile-markets
The VIX “fear index” has been moving
up as 2020 approaches. Many believe
that a market slowdown is the best we
can expect in the coming year while
many others expected ever-increasing
volatility and a major correction.

The issue for long term investors is
how to invest in volatile markets.

As the bull market ages, investors are
not only worried about their
investments next year, many investors
are scared to death, according to
CNBC Trading Nation.

Stocks may be at highs, but investors
could be acting overly cautious
heading into 2020.

Even more than that, they are acting as
though they are “scared to death,” says
Jeff Saut, chief investment strategist at
Capital Wealth Planning. He says most
of the investors he talks to fear what
may come in the New Year.

While the analyst goes on to reassure
readers that this secular bull market is
likely to last longer, this is not the
opinion of many of today’s investors.
When uncertainty looms, volatility
increases. Here are some thoughts
about how to invest in volatile markets.

How to Invest in Volatile Markets
The first part of investing during
periods of volatility is to reassess what
you are investing in and the timing of
your investments. Forbes offers their 5
best investment strategies for volatile
markets.

Building a Cash Reserve during
Periods of Investment Volatility
In our article about a silent warning
for investors, we noted that Warren
Buffett is accumulating huge stockpiles
of cash at Berkshire Hathaway.

Buffett is not finding his usual mix of
the best stocks to invest in based on
intrinsic stock value (forward-looking
cash flow and low market price).

This situation with Buffett is similar to
the period before the dot com crash
when he pulled money out of the stock
market because he said it did not make
sense.

Forbes also notes that building a cash
reserve is a good idea as it lets you
take advantage of a market downturn
by buying again at a discount!

Investing in High Dividend Stocks
Dividend stocks should be part of any
investor’s portfolio as they provide
income even when their share prices
fall in a market correction.

And, such stocks are likely to fall less
in a bad market because investors are
buying them for the income as much as
their growth potential. Read our article
about choosing the best dividend
stocks for a few tips on how to avoid
pitfalls in dividend stock investing.

Value Stock Investing When Markets
Are Volatile
The problem right now with value stock
investing is that the market and the
leading performers are overpriced. This
is why Buffett is building up such a
hoard of cash.

Nevertheless, if you are investing for
the long haul (until retirement and
beyond) you can dollar cost average
your investments with true value stocks
and expect to see long term profits.

As an example, the S&P 500 peaked in
August 2007 at 1552 and bottomed out
in April of 2009 at 826. Anyone who
bought this index at the low point has
seen their investment quadruple to
3168. However, even investments
made at the high point have doubled
by now.

The point is that if you are in the
market for the long haul, in well-chosen
stocks, you will make money. And, if
you invest steadily with a fixed dollar
amount, you will profit in the long term.

Out-performing Sectors and REITs When
Investments Are Volatile
We added these two of Forbes’ suggestions
as one category. In these cases, you are
looking for broad market sectors that are
protected from the trade war and areas like
managed-real estate that tend to keep
making money no matter what the stock
market as a whole is doing. In each case,
you need to do a bit of homework in order to
pick and choose the best investment.

For the majority of investors, building a
cash reserve, buying and holding solid
dividend stocks, and buying value
stock using dollar cost averaging are
probably your best bets for how to
invest during periods of volatility.

For more insights and useful
information about investments and
investing, visit
www.ProfitableInvestingTips.com.

How to Invest during Periods of Volatility

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How to Invest during Periods of Volatility