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Five Strategies to Help People Deal with the Chaotic Stock Market

  • [아시아뉴스통신] Ian Maclang 기자
  • 송고시간 2018-02-28 18:48
  • 뉴스홈 > 국제
Photo By Phonlamai Photo via Shutterstock
 

The Standard & Poor's 500-stock index has declined by more than 10 percent from January 26 to February 8, yet it was able to make a rebound to reclaim the majority of those losses.Though the market volatility was normal, theories are set to provide insights about certain elements that triggered the said volatility.


Wells Fargo Private Bank deputy chief investment officer Adam I.Taback mentioned that economic expansion fueled the volatility that pushed the market into a correction.He observed that people are more aware about the risks involving equity markets and they are satisfied with their diversified portfolios.However, Taback stated that the same people are more concerned about their place in the economic cycle.


From a historical perspective, Cresset Wealth Advisors founding partner and chief investment officer Jack Ablin observed that there are three elements that prompt volatility:


1.) A technical correction where stocks pause yet continue to rise due to sound company basics;


2.) A correction that manifested business cycle reconfiguration; and


3.) A systemic correction that was once manifested by the 1929 stock market crash and the 2008 financial crisis.


The New York Times provided readers with five tips in order to be able to make it through a chaotic stock market:


1.) Choose individual winners- The markets' unstable swings prompted active investment managers believed that these were the times that their aid will become a valuable asset.


Cognios Capital quantitative research head and portfolio manager Francisco Bido relayed that he decreased the number of stocks he invested and mentioned that conviction fueled his stocks initiative.


2.) Exercise careful consideration about bonds-  The rise of interest rates and Jerome H.Powell's ascent as the new Federal Reserve chairman can offset the potential returns for individual investors.The article suggested that private debt, providers of loans to small and medium-sized companies, can become an alternative to bonds at this stage.


Taback assured that private debt does not manifest the same impact that bond portfolios when interest rates increase.



3.) Seek alternative methods- Alternative investments are the investors' go-to method if they are ready to relinquish access to their finances for bigger returns, yet its attraction decreases the moment markets issue double-digit gains.


Hedge funds, meanwhile, garnered notoriety for their high fee charges to manage money and take a share of any profits.This notoriety has prompted California Public Employees' Retirement System to depart from hedge funds four years ago.


Financial advisers and money managers suggested that investors must reconsider hedge funds and various alternative assets in a hostile investing environment.


4.) Go global- Wells Fargo Investment Institute president Darrell L.Cronk said that the United States markets' strong rally caused many investors to have a home-country bias, a phenomenon where investors possess overweight investments in American stocks.


Pitcairn chief investment officer Rick Pitcairn observed that younger global economies are currently manifesting sudden growth.


5.) Enjoy the ride- Vanguard head of portfolio construction Francis M.Kinniry reminded that volatility contains an element of persistence, while Cronk clarified that volatility is not a bad thing provided that people have a plan in mind.Cronk added that huge corrections are a basic element of an economic cycle and recalled that the two previous economic recovery cycles experienced three corrections toward the end.