- Financial market volatility refers to the day-to-day fluctuating prices of stocks. Long-term investors must be careful about the risks and uncertainty associated with it, but also cognizant of the opportunities it can offer.
- Building a strong, diverse portfolio prevents you from making emotional decisions. WealthArch’s value investing approach can help you sleep better at night by reducing portfolio volatility.
- Conservative investors who don’t understand what market volatility is should try WealthArch’s services and see their money grow more steadily compared to other approaches.
Market volatility is the measure of how sharply stock prices rise or fall over time. A stock trading at $100 can easily swing to $110 one week and drop to $90 the following week. These swings reflect investors’ reactions to news, earnings reports, or economic data. Volatility is a double-edged sword. It can let you buy high-value assets at a sizable discount, but at the same time, it could signal the risk of steeper losses ahead if the downturn continues.
Investors who like steady investments and peace of mind should understand what market volatility is. It comes in handy if you are looking to grow your money safely. How? This guide from our team at WealthArch Investment Services explains the concept in simple terms.
What Volatility Means For Conservative Investors
Long-term investment is all about staying in the game for as long as possible. It’s about disciplined investing without being emotional when market prices rise or fall. Financial market volatility doesn’t faze a smart long-term investor, because he knows what to do when the market panics.
- Risk, opportunity, and uncertainty: When we explain what market volatility is, we mean the degree of price swings you see day to day. Higher volatility equals higher unpredictability. If you see a stock fall abruptly and sell during a downturn, it may or may not be a good time to buy more. Sometimes, it’s wise to cut your losses. But at other times, the volatility is only temporary, offering investors the opportunity to buy stocks or add to their positions at really cheap prices. Smart investors focus on long-term valuations rather than short-term fluctuations during times of distress.
- Emotional reactions: A majority of market volatility is driven by fear and excitement. If you are new to investing and don’t know what market volatility is or how it works, seeing a sudden drop in the stock price might scare you. This can cause you more harm than the volatility itself ever will. Panic selling is the cardinal sin of investing, because you lock in large losses when you sell your investment at absurdly low prices. It interrupts the potential for your investment to rebound and the steady compounding you need to grow money over the long term.
- Portfolio resilience: WealthArch’s value investment philosophy emphasizes buying stocks only with a margin of safety. By only buying undervalued securities, we create a buffer that helps us reduce volatility compared to other approaches. Diversifying your portfolio also helps reduce its volatility. A diversified mix of stocks, bonds, gold, and other holdings smooths out shocks. Since all assets don’t respond to market changes similarly, your portfolio stays on track.
How To Sleep Well In A Volatile Market
Instead of researching what market volatility is and how to navigate it, you can save time and effort by choosing a wealth management and investment service like WealthArch. We take away the headache of making investment decisions by investing your money for you—in the right places, at the right time. We will be there not only to make sure that you don’t panic, but take advantage of opportunities too.
Our tried and tested value investing approach (popularized by Warren Buffett) is resistant to financial market volatility. Here’s how we can help you stay on track when stock prices jump or tumble:
- Margin of Safety: We only buy stocks priced well below our own valuation. That buffer reduces the chance you face permanent losses when turbulence hits.
- High‑Conviction Portfolios: By holding just 5-25 carefully vetted stocks, we monitor each position closely. You won’t get lost in a sea of line items. Our focused lineup of undervalued stocks weathers rough patches better, because we focus on the investments that offer the best risk-adjusted returns.
- Deep Analysis: Our advisors comb through the numbers thoroughly and conduct in-depth real-world market research. This allows us to get insights that many other institutions’ miss allowing us to uncover true bargains.
- Cash Reserves for Agility: We keep liquid funds on hand. When prices dip, we move fast to buy quality assets without selling other holdings at a loss.
- Aligned Interests: Earl invests his own assets alongside yours. You gain confidence knowing our success depends on making prudent choices.
Partner with WealthArch for a Lower-Risk Value Investing Approach
Want to invest but don’t know the first thing about what market volatility is? Feeling lost about when to buy and sell stocks? Many of our satisfied clients were like that once.
Find out what WealthArch can do for you. Let’s build your wealth together!
