Ep 40: How to Handle a Volatile Stock Market

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Today we’re talking about why we see volatility in the stock market. We’ll also share what you should and should not focus on when this happens and how to plan and prepare no matter which direction the market goes.

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Show Notes

We’ve become so accustomed to the stock market going up and up. But January showed us that the stock market can go down.

Why does the stock market go down? When you’re investing, you might be taking ownership of a company. If a company’s profits go down or they underperform, they can go down. Volatility also affects the market.

Inflation is one area to focus on. We hoped inflation would start to fade away, but December and January showed us the prices continue to go up. That can cause volatility in the market. Because of inflation, the fed has decided to raise rates, which makes loans more expensive for businesses and consumers.

On this episode, we’ll also share:

  • How Covid affects volatility
  • How Russia and Ukraine affect the market
  • Statistics about the S&P 500 and more
  • The importance of diversification
  • How to focus on what you can control
  • Why you should buy during a down market
  • Why you should control your own thoughts about the market

JP Morgan Guide to Markets:

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-the-markets/mi-guide-to-the-markets-us.pdf

Market watch:

https://www.marketwatch.com/

EFA:  https://www.ishares.com/us/products/239623/ishares-msci-eafe-etf

EEM:  https://www.ishares.com/us/products/239637/ishares-msci-emerging-markets-etf

Listen to the full podcast or use the timestamps below to jump to a specific section. 

[1:28] Stock market drops

[2:37] Why the market drops

[5:02] Inflation

[7:20] Covid

[7:39] Russia and Ukraine

[8:36] Statistics

[11:52] Importance of diversification

[13:04] JP Morgan guide to the markets

[16:04] Focus on what you can control

[19:26] Buy during a down market

[20:39] Control our own thoughts

Thanks for checking out this episode. We’ll talk to you again soon.

“Since we can’t control the market, we don’t want to focus on what happens each and every day on the market. We don’t want to panic.”

-Scott Sierens