The stock market has been volatile in recent months, with a brief recovery in July followed by losses in August. With the Federal Reserve continuing to raise interest rates, investors are left wondering if the stock market can recover. CNBC's Jim Cramer warned that it is unlikely to happen soon. However, there are strategies that investors can use to navigate these turbulent times.
Diversifying or distributing your money among investments is key to reducing investment risk and making it easier to travel through a tumultuous market. An additional concern in the future will be market fundamentals, such as revenues and corporate profits. Investors can take stock of the depreciated assets of their traditional IRA and transfer some of that money to a Roth IRA. Meanwhile, the Federal Reserve is looking for signs of economic and market slowdown as proof that rising interest rates are cooling strong inflation.
After briefly exiting “bear market territory”, the S&P 500 and NASDAQ Composite indices fell back to that level and reached their lowest points of the year in September. Both the high-tech NASDAQ composite index (which includes about 3,000 common shares) and the Russell 2000 small-cap stock index fell to a bearish market position earlier in the year. When the stock market falls, it can be difficult to see the value of your portfolio decline and do nothing about it. Haworth expects a significant increase in the Fed's rate-raising activity, but economic growth is not collapsing and the labor market remains strong.
Investors can take advantage of flash sales when a disaster strikes, and keep an updated wish list with individual actions they'd like to have. The S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite had rare weekly gains in an ongoing bear market, which is also in the middle of the earnings season right now. Big Money respondents are relatively negative about the short-term trajectory of financial markets, but optimistic about long-term opportunities given the most attractive entry points in years for both stocks and bonds. The stock market is generally positive for midterm election years, although October can be notoriously volatile. Investing in the stock market is inherently risky, but what contributes to long-term returns is the ability to overcome unpleasantness and continue investing for the final recovery, which is always on the horizon.
By diversifying investments and taking stock of depreciated assets, investors can reduce risk and make it easier to navigate volatile markets.