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5 ways to deal with extreme market volatility!


Recently, stock market volatility has increased by several notches. And conditions can remain challenging for weeks or even months, given the range of dangers facing the global economy.

High inflation around the world threatens to bring down consumer spending and increase business spending. Signs of a protracted conflict in Ukraine and a resurgence of Covid-19 cases in China add to this pressure and create their own particular problems.


Clarity is what investors want when times get tough. But the truth is that stock markets can be a great way for investors like me, despite times of extreme volatility.

As Dan Lane, a senior analyst at the Freetrade trading platform, says: “Inthe past is the price we pay for the long-term superiority of stocks over cash».

Lane notes that continuing to invest in good times and bad is essential for consistent profits. He says that “you will catch market highs and lows so that your average price will smooth out in the long run».

Lane has compiled a list of five principles he uses to deal with stock market volatility:

№1: Invest with a clean head

«Ohone of the things we are not very good at is making decisions under pressure“- says an analyst at Freetrade. Unfortunately, we feel compelled to act when markets are volatile, bringing unwanted emotions such as fear, excitement, and anxiety into the investment process.

Lane reminds investors that market volatility is normal, so acting sloppy is a bad idea. He says we should “take a step back and remember that this is what we have all subscribed to».

№ 2: Swallow the pain

Lane says stock voters should just accept that market volatility will happen and that pain will come soon.

He notes that an alternative to equity investing is to keep your money in cash. This leaves human wealth at risk of erosion due to rapid inflation (which is currently around 7%).

№ 3: Stay level

«A good investor will try to maintain a measure no matter what is happening around the world or in their portfolio“Says Lane. This means we should avoid blowing air in joy when markets are growing or «[toppling] from this pedestal”When things get tough.

«Conduct research and keep in mind long-term travel“- he comments.

№ 4: Have a diversified portfolio

«Keeping a range of stocks with different perspectives and external influences makes sense in better times“he says. And he adds that recent market volatility also shows why diversification between uncorrelated asset types is beneficial to investors.

A Freetrade analyst comments that buying assets that act differently with each other is a useful tool. Whether it’s for fine-tuning risk or for creating a portfolio to absorb stock market shocks.

№ 5: Get ready to go for bargain shopping

Lane notes that “sometimes even good companies get lost in the crowd”When market volatility arises. That’s why you should have an already prepared shopping list so an investor can pick up some of these stocks at discounted prices.

«A lFor professional investors who care about price, the wish list is complete so they can quickly assess the damage during a downturn and decide if it’s time to invest or leave“he says.

Here’s what I’m doing now

I, for example, plan to continue buying UK stocks for my own portfolio following this recent market volatility. And I have a ready list of stocks that I follow.

No one can predict when the current attacks of market volatility will pass. And, as Lane says, continuing to invest in good times and bad is the key to making long-term profits.

In addition, the recent turmoil means that many quality stocks are now traded at discounted prices. If I wait, I may miss the opportunity to redeem them before they jump in price.

4 shares of FTSE 100 I would buy today

Royal Mail is one of the best stocks I am considering buying out. The oldest British courier is very sensitive to broader economic conditions, and revenues could fall if the volume of letters and parcels fell sharply. But I’m still a big fan, it seems to me FTSE 100 The firm’s crucial role in e-commerce provides long-term excellent opportunities for growth.

The recent market volatility is now coming to an end Royal Mail trade at a P / E ratio of 6.2 times. Its dividend yield is also 7% at current prices of 325 pence.

I would buy Smith and nephew stocks also after their fall to three-year lows. And this despite the threat that the revival of Covid-19 in China poses to revenue. Most of his prostheses and joints are used in planned surgeries. These minor procedures have been canceled massive in the midst of a pandemic.

I think Smith & Nephew has a very bright future. The long-term outlook is particularly encouraging in emerging markets as the cost of health balloons. I also like the FTSE 100 business because of its growing position in surgical robotics.

I would have invested in Antafagasta as well as after a sharp drop in stock prices. The downturn in the world economy will hit Chinese exports hard and, consequently, the demand for copper Antofagasta. However, I expect earnings from mining stocks to grow over the next decade as sales of electric vehicles (EVs) grow.

Antofagasta’s fall to £ 13.40 a share pushed his dividends to an impressive 5.5%.

I’m also thinking of buying Runway following the recent market volatility. This is even though the advertising market may stop as consumer spending is reduced and companies save money.

I like WPP because of its commitment to increasing mergers and acquisitions profits and an improved focus on the fast-growing digital sector. I think this FTSE 100 stock could bring great profits over the next decade.

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