Last week was one of those weeks where the stock market movements leave many investors scratching their heads. The market had a tremendous rally on Monday and Tuesday and then the second half of the week gave back most of those gains. In stock market parlance, it’s called being whipsawed and it can be emotionally draining.
These big swings are symptomatic of a market that doesn’t know how to price in the current state of affairs, and thus buying and selling are based on emotions more than fundamentals. This price action is common during a bear market and there will most likely be more to come in the next few weeks with inflation reports, corporate earnings, and the next Fed meeting on Nov 1.
Investors can protect themselves from being whipsawed by focusing on the long-term stock market trend and avoiding the noise and media frenzy of short-term volatility. Astute investors can profit from this volatility by purchasing low priced stocks on these dips to build up their long-term stock positions. I continue to see any market drops as excellent buying opportunities to put extra cash to work.
Please reach out to me anytime – I’m here to answer your questions and discuss what's on your mind.
Photograph by: Xiang Lee on Unsplash
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