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How do I invest in a volatile market?

The last 2 years since the pandemic outbreak has been interesting for investors. As they say, “In every crisis lies an opportunity.”

High growth in technology sector as well as healthcare (albeit stagnation after 6 months or so) motivated new and young investors to jump onto the bandwagon.

However, it should be noted that the great gains in the last 2 years were the exception rather than the norm.

How should one invest in a volatile market?

We embrace this volatility and adapt to it. What we recognise as volatility is the aggregated result of people being emotional and tied to sentiment, their hopes, their panic, their optimism, moving the market as an overreaction to events and trends.

Terence Nunis, Investing in a Volatile Market

We ride the swells of this volatility by keeping to a few principles. We look for well-run companies, with good market fundamentals.

Terence Nunis, Investing in a Volatile Market

We should bear in mind that the market fluctuates up and down.

Image for illustrative purpose only.

In general, bullish (upward-trending) markets tend to be associated with low volatility, and bearish (downward-trending) markets usually come with unpredictable price swings, which are typically downward.

“This is how it works,” Lineberger says. “And if you can stomach it, you can enjoy outperforming inflation by almost three times per year. My best advice is to embrace volatility and know that it’s normal.”

What Is Market Volatility—And How Should You Manage It?

Terence Nunis offers the following points of advice in investing in volatility:

  1. Identify growth industries.
  2. Identify growth regions.
  3. Consider where the market will be a decade or fifteen years from now.

[Read more: Investing in a Volatile Market]

Image for illustrative purpose only.

Always remember that investing is and should be for the long term.

Investing is a long-haul game, and a well-balanced, diversified portfolio was actually built with periods like this in mind. If you need your funds in the near future, they shouldn’t be in the market, where volatility can affect your ability to get them out in a hurry. But for long-term goals, volatility is part of the ride to significant growth.

What Is Market Volatility—And How Should You Manage It?

Relevant reads:

And from myself:

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