It’s all over the headlines. The markets are going through a period of unprecedented volatility. It is, of course, a time that may cause worry to many investors. Here, Anne O’Doherty, our Head of Life & Pensions answer the most commonly asked questions we have received and shares our view on how investors should react.
What is market volatility?
Market volatility is an investment term which is used to describe periods of unpredictable and sharp price movements in the stock market. It covers when prices fall but can also refer to sudden price rises. Understanding market volatility and being aware of it is an important part of investing.
What makes markets volatile?
There are many factors that can affect the markets. Volatility is usually caused by political and economic factors, industry or sector changes or even individual company news.
The current market volatility that we are experiencing is being driven by the war in Ukraine, pending interest rate increases, fears around new Coronavirus variants and sudden rise in inflation among other factors.
What does a “bear market” mean?
A bear market is a prolonged period of decline in the stock market, usually a decline of at least 20%. It’s an indicator of low investor confidence and a sluggish economy. A bear market is usually followed by a bull market. This is when securities are once again on the rise and tends to last longer than the preceding low.
What impact will this have on my investment?
While it can be difficult to witness any declines in your portfolio, it is important to apply logic and not act out of emotion. The most important thing for an investor to do is hold their course.
History has shown that those who have stayed invested during previous periods of market volatility have achieved their original investment objectives.
I’m not sure what to do, where can I get help?
Investing is a long-term commitment. A well-balanced, diversified portfolio would be built taking into account the ups and downs of the market. Although volatility is a typical part of investing, it’s not unusual to be concerned by periods of it. If you have any questions or concerns in relation to your own investment, please don’t hesitate to get in touch with us at Quintas Wealth Management.