Title: Tips for Investors in Volatile Markets
Headings: Tips for Investors in Volatile Markets
Tips for Investors in Volatile Markets
Key Takeaways
What Is Volatility?
Investing in a Volatile Market
How Trading Is Affected During Times of Volatility
Choosing an Order Type in a Volatile Market
The Bottom Line

Content: This theory flies in the face of efficient market hypothesis (EMH), which states that market prices are correct and adjust to reflect all information. This behavioral approach says that substantial price changes (volatility) result from a collective change of mind by the investing public. It's clear there is no consensus on what causes volatility, however, because volatility exists, and investors must develop ways to deal with it. Investing in a Volatile Market
One way to deal with volatility is to avoid it altogether. This means staying invested and not paying attention to short-term fluctuations. Sometimes this can be harder than it sounds; watching your portfolio take a 50% hit in a bear market can be more than most can take. One common misconception about a buy-and-hold strategy is that holding a stock for 20 years is what will make you money. Long-term investing still requires homework because markets are driven by corporate fundamentals. If you find a company with a strong balance sheet and consistent earnings, the short-term fluctuations won't affect the long-term value of the company.