Popularity of the search query "The market will collapse?» has greatly increased in recent days. Investors worried about rate hike and political tensions. Experts recommend: don't panic.
Do not trade on the news
Analysts say, that investors should not get involved in the "international diplomatic drama". Broker Pepperstone writes: News trading is not for everyone. You must constantly sit in front of the screen, and it is also true to separate the noise and keep emotions under control ”.
“Volatility and corrections are part of the investment. The best thing to do in this situation is literally do nothing.”, - considers the financial service Bankrate.
Similar advice is given by the LendingTree marketplace.: “Sometimes the market behaves chaotically, so it's better to leave your money there, where are they. After the sell-off in March 2020, the market quickly recovered. Even with the recent drop in S&P 500 is close to its maximum".
Think about diversification
Fluctuations should not significantly change the long-term strategy. But falls are a good chance to check, How well does an investor's portfolio match their risk profile?. For example, a portfolio of technology stocks may fall more than the market, what will bother the investor. Probably, such a portfolio should be better diversified in the future.
“A market downturn is a great opportunity to look at your investments and understand, do they reflect your goals", — financial advisers from Cereus Financial Advisors noticed.
Don't catch the bottom
Experts often recommend buying assets on a drawdown during a panic. The investment company Kaufman Rossin advises at the same time to correctly assess the investment horizon: “Depending on your age and horizon, a fall could be a good time to buy”.
In such a situation, the NerdWallet financial service calls for abandoning market timing: "Probably, you can't catch the bottom. If you want to buy on a dip, waiting for the perfect moment is not the best strategy.”.
The fall is not forever
According to data on 24 February, Dow Jones fell from its high to 10%, to 33 132 points. This rollback is called a correction.. S&P 500 and Nasdaq also in the correction zone. They are 12% and 19% below their highs..
The Dow Jones last corrected in February 2020. Later, the correction turned into a bear market - the index fell by more than 20%.
MarketWatch reminds: since 1999 the Dow Jones has experienced 20 corrections. And in 15 cases, the index was already higher a year later, than before the fall.