Stock Market Volatility
How do you cope?
It’s no secret that the sustained generational low levels in interest rates have helped the stock market climb to near record highs over the past decade. Many would assert that the record rise in stock prices is artificially propped up under monetary policy decisions that have forced savers to take on more risk in order to find more acceptable returns. Nevertheless, for those of you who have not let volatility of stocks shake you into making bad decisions, you have been rewarded for sticking with stocks despite the general public’s irreverence towards them. Low interest rates have certainly played a part in your success, but not all of it.
Many people view stocks in the context of “how long will the party last?” It’s a rational thought, especially if you’ve lived through some vicious downturns like 1987, 2001, and 2008. Yet, underneath the shadows of some pretty dreary market conditions, transformative technologies still emerged amidst the wreckage, and they don’t get enough credit for the role played in the economic recovery and subsequent rise of the stock market. Apple, Google, Facebook, Netflix, and Amazon are the sexy names that grabbed the headlines, but what about the likes of Nvidia, Intuitive Surgical, Lululemon, and Regeneron? They are just a few lesser known names that have played a part in the market’s rise, and I could name several more!
It’s easy to be a skeptic of the stock market, and the financial media adds fuel to that fire at times. What usually doesn’t get shown by mass media is the next revolution of technologies coming to the forefront right now, which could be the catalysts for the next bull market run. Artificial Intelligence, autonomous vehicles, 5G networks, medicinal cannabis, machine learning, gig economy jobs, green energy, etc. are just a few that could provide the rising investment returns for investors reaching into the next generation.
So, how do you cope with stock market volatility that is inevitable? One method is to reflect on the great advances in your quality of life that you have personally witnessed over your lifetime. Then, consider how many great American companies played a role in that continuum, and remember the levels the stock market has achieved in that process. It’s not a coincidence that stock market performance is a direct reciprocation of the efforts of the men and women who have helped create its great infrastructure. Innovation doesn’t stop when markets fall. It’s our job to position you for success under those tenets of investing in good and bad market conditions. Have a great summer!