Five Tips For Investing In Volatile Markets


Investors can find keeping up with the markets a struggle with real-time reporting, sudden rises and falls and no real trend other than volatility in recent years.

Market swings can make or break investors in a few minutes, but although technology allows the financial world to work 24/7, life goes on but investors still have to deal with volatile stocks.

Looking at how the markets have moved lately, the only trend seems there is not a trend and that investors will have to live with wild swings for a while yet.

What can investors look for to beat volatile markets?

Every now and then, markets take a pause for breath and stand still before dashing off again.

These are opportunities and here’s what to look for:

  • Good companies trading below par

Every now and then a star pick drops in value for a few instants, which is the time to swoop in a buy. This can happen with shares at the top and bottom of the markets when prices are unexpectedly knocked back by a few small trades

  • Trade up on rebounds

Have a list of stocks that you are willing to ditch or a war chest of cash ready to jump in to buy better quality shares when the market is in decline.

When this happens you can dump average performers and replace them with better performers with stronger balance sheets, improved dividends and a better potential for growth

  • Keep hold of some cash

The returns may not be great, but having some cash handy is a positive asset when the markets fall and you can buy cheap. Interest rates may be low, but so is inflation, so cash is holding value and is worth a place in a diversified portfolio.

  • Take easing into account

Central bank easing is masking the true value of some shares and bonds, so take a future price adjustment into account if you are in one of these markets.

  • Do the math

Don’t buy for the sake of it, look at investment strategies like pound cost averaging, return on investment and other ratios. Everyone says past performance is no guarantee of future success, but some analysis is better than sticking a pin in a list

Don’t forget volatility is the new normal, so investors need to develop a strategy to cope with shock rises and falls.


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Chris Ferguson

About Chris Ferguson

Chris formed Credence to bring credible financial advice to the offshore marketplace. Chris has been in financial services throughout his whole career, with experience in the GCC, United States, United Kingdom and Australia. Chris entered the financial services sector to enable as many people as possible benefit from freedom and choice in life by making good decisions rather than experiencing stress and anxiety over money.