Introduction When the stock market goes up one day, and then goes down for the next five, then up again, and then down again, that’s what you call market volatility. Historically, the volatility of the stock market is roughly 20% a year and 5.8% a month, but volatility keeps on changing, so we go through periods of high volatility and low volatility. Analysts and experts have different opinions about what you should do in volatile markets, and how to scope with stock market volatility or the tendency for share prices rising and falling.
Analysts.
Justin Stewart, co-founder of Seven Investment Management says: “ Crashes happen. If you are a longer-term investor, you should look straight through them and remember the power of compounding dividends, or in cone arising on income.” Andrew Humphries, a director of St James Place Wealth Management, thinks that Diversification is very important and having a portfolio that is solely exposed to one asset class- be it equities, bond or property- is dangerous and all investors should ensure they hold an appropriate range of assets” Andrew Bell, the chief executive of Witan Investment trust advised: “ It is better to buy into fear and cheapness and sell into euphoria and high valuation, as long as you can endure the period before trends reverse. Investors should have this tattooed somewhere to prevent natural human psychology from making them do the opposite. Bill Mott, the manager of PSigma income, said “ in an uncertain world, investors should wait for the buying opportunities that volatile markets are certain to provide-but’ when the opportunities arise they should be prepared to brave. Alan Miller, co-founder of SCM private, advised his clients “When market offers you the chance to buy $1 notes for 70p, you should take it. And crashes don’t change fundamental values. He also said it’s very important to always have a