Remember the 2008/2009 GFC (Great Financial Crisis)? Who can forget. But remember this, too: we survived it. During periods of crisis, it’s normal to see tremendous volatility.
Consider this: during 2008 the low was down almost 40% and at the top of 2009, you had the market up almost 80%. Within less than a two-year period you had these tremendous swings. But if I asked you today, where was the bottom of the recession? It was March 2009. Was it obvious that day that it was the bottom?
It’s impossible to predict where the bottom or the top is. That’s just part of the investing. Within a given year, you can have a great amount of up and down. Find out how this applies to 2020 market volatility due to the pandemic in David Hollander’s short video below.
Risk vs. Return
If you want risk (and higher returns), you invest in stocks (known as equities). Volatility is normal in equities: you must expect it. Even though it feels different, or more severe, it’s not. If you don’t want to take any risk, buy a 30-day T-bill (treasury bill). And you’ll see that any notable returns are just not there.
Like you, most of our investment and retirement clients want to learn how to increase income, reduce taxes, and not run out of money while minimizing market risk and unnecessary fees. Make sure you understand the good, the bad, and the small print around market volatility so you can protect your assets.
The coronavirus outbreak has continued to be source of volatility in financial markets as more countries have reported cases of infection. According to Statista:
Between March 6 and 18, 2020, all major stock market indices lost value due to the COVID-19 (coronavirus) pandemic sweeping across the globe. The CSI 300 index in China lost 12.1 percent of its value during this period, whereas the FTSE MIB index in Italy lost 27.3 percent of its value.
How do you avoid the most common financial mistakes and deal with market volatility? Find out from The Sandman, David Hollander: