After years of relatively calm and stable financial markets, volatility is back. Fears over slowing growth in China, a correction in China’s stock markets and devaluation of their currency has raised many questions about how this will affect the global and U.S. economy. In typical and predictable fashion, Wall Street shoots first and asks questions later, and waves of selling and buying has caused three to four percent swings in the markets over the past several weeks.
A natural reaction of inexperienced investors (and inexperienced commentators in the media) is to panic. This fear leads to selling investments to reduce stock allocations, which may prove to be a money losing strategy over the long term.
While many investors may be panicking, seasoned investors and professional investment advisors do not. This is because they know that the markets have cycles, and their record for coming out of downturns is 100 percent.
Written By: Ray Martin