The twists and turns we’ve endured have left investors rattled and sentiment in the dumps. In fact, U.S. consumer confidence is hovering at 2012 lows. While stock market performance has left something to be desired, one thing to gain from past month is an understanding of how difficult and dangerous it is to game short-term fluctuations. Fear often drives investors to take action. But attempting to time every shift in a whipsawing environment frequently results in headaches, sleepless nights, and unnecessary losses.
Rather than diving into risk at the first sign of strength or fleeing for the sidelines when weakness crops up, investors should be taking prudent steps to construct stable long term portfolios. Defensive sectors and dividend-paying equities may be dreadfully boring options when stocks are rallying. When volatility sets in, however, these asset classes will keep investors on the highway and help them defend against the threat of prolonged shake-ups.
This is not to say investors should be ignoring day-to-day action completely. Those who stay well-informed and up to date with major events are better able to view the world through an educated lens and approach new challenges with a level head.
Next week is a busy one on the earnings front. Big names including Apple and General Electric have already released their performance numbers and outlooks but, as we embark on the second half of the season, hundreds of other companies have yet to step up to the plate. Meanwhile, the FOMC rate decision meeting and Friday’s non-farm payrolls report are sure to be don’t-miss economic events. Although there have been some bright spots, much of the recent labor-related data has been unsettlingly sluggish. This fact, combined with the market’s overall shakiness, will likely ensure that expectations are reserved heading into the big release.
It’s easy to get overwhelmed and frustrated in this type of turbulent environment. This weekend, be sure to dedicate some time to friends, family, rest, and relaxation.
If you have any questions or comments, please don’t hesitate to contact us at (800) 548-3797.