When encountering market volatility, Mark Hanna, a senior account manager at Market Haven, explains that investors should be mindful of their assets and consider their portfolio more holistically. In a volatile market, investors are unsure about how a market will perform and its effects on profits. Currently, this especially applies to the crypto market, which is seeing rapid changes due to an investigation into Binance Australia.
Besides viewing their market from a holistic perspective, investors should be honest about risk tolerance while considering their goals. The best way to do that is to assess the diversity of one’s portfolio instead of focusing on where the market is going. But for a well-rounded approach, here are a few more tips.
Downtrends Are Part of the Cycle
Based on data for the S&P 500 Index, Mark Hanna of Market Haven has found that shares have dropped and entered a bear market every couple of years. In fact, losses around these times can reach an average of around 40 per cent. But despite how scary a bear market may seem, data shows that stocks were able to recover and offer long-term gains.
Have A Plan That Survives Ups and Downs
Mark Hanna has often mentioned the benefits of having a diverse portfolio that includes a mix of stocks, bonds, and other assets. Nevertheless, it’s important to keep in mind that while a bigger mix can increase potential returns, it also increases the likelihood of experiencing market volatility.
To avoid facing such a situation, it’s better to have a mix of investment assets according to your financial situation and investment goals. These should be assets that you stick with, regardless of market volatility.
Invest In Different Sectors
As an investor, a great approach to mitigating the effects of a volatile market involves investing in companies that continue to churn out profits amid challenging economic conditions. These are usually companies that have been around for a long time. Therefore, they’re worth adding to a portfolio to stay afloat in precarious market conditions.
Considering the current environment, it’s better to invest in different sectors such as utilities, healthcare, and consumer staples. That’s because these areas continue to perform well, even in times of uncertainty, as people cut back on other luxuries.
Invest Across Asset Classes
Most investors protect themselves against volatile conditions by investing in multiple asset classes. This is effective since each asset behaves differently when exposed to certain conditions. Generally, people find that investing in funds rather than individual shares tends to limit risks associated with volatility. Keep in mind that reducing risk becomes highly important in times of uncertainty, so opting for such an approach can prove beneficial.
Also, senior account manager Mark Hanna of Market Haven has found that volatility never lasts forever. Instead, it occurs in phases that surge and subside over time. And when prices of shares start tumbling, it can be tempting to sell them off. However, it’s difficult to time it right, so it’s best to hold on unless you’retotally sure.