-Volatility from the Investor’s Point of View
-Volatility and Market Fluctuation
-Volatility – threat or opportunities
-The virtue of patience for investors
“Investors often think of their equity exposure as their greatest risk, when in fact, their greatest risk is retiring without assets,” – MATT PEDEN.
Market volatility is an inevitable part of the stock market and often not appreciated by its participants, somewhere due to a lack of understanding of this concept. Simply put, volatility is the range of price change security experiences over a given period. Low volatility means the price of the security is relatively stable. Highly volatile security hits new highs and lows quickly move erratically and has rapid increases and dramatic falls.
“A Blessing in disguise”
While volatility comes along with some uncertainty, it also shows a way to new opportunities to the investors. Declining prices prove to be the opportunity to add good quality stocks at discounted rates. Highlighting the positive aspects of a volatility streak can encourage investors to stay in the market, rather than selling off assets out of fear. It can be riskier for investors to pull out of the market during periods of volatility, instead of riding it out.
People experience the pain of loss much more than the joy of gain. Investing is inherently about risk, but risk works both ways. Each trade carries with it the risk both of failure and success. Without volatility, there is a lower risk of either. That includes shifting into more conservative investments, such as bonds, to escape volatility.
“RATIONAL thinking rather than EMOTIONAL”
Investing can be a tough task on many investor’s emotions. It can be hard to see the daily market fluctuations. Emotional neutrality is what every investor needs to practice which simply means setting aside emotions of fear and greed while you make important decisions regarding your investments. It’s important not to get carried away and swing into this market sentiment. Market movement may be important, but one should pay more attention to the underlying value of an asset.
“PATIENCE IS A VIRTUE, but it can be difficult for investors to master.”
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” – Warren Buffett
Nobody knows what’s going to be the next move of the market. Prices fluctuate every second. If you don’t have patience, every fluctuation will make you restless. And soon, you can end up losing both your money and your mind. The market demands two every important prerequisite – patience and self-discipline and it shows how well you can check your emotional state, greed, and manage money to achieve your goals. The asset you have selected to invest in, you should not be bothered about its short term volatile in the value of the investment and stay invested for long-term.
When it comes to investing, patience is really important as the share market is a place of great unpredictability. Well-grounded investors stay in the present, while distressed investors project their feelings into the future. Their assumptions about what may happen, versus what is happening, with their investments, can amplify fear and trigger impatience. Having a plan for practicing patience can minimize projecting behavior.
“Patience is always better than panic”
The Indian stock market is now been looked at with a lot more potential. Thus opportunities are infinite but smart investing requires your action in synchronization with your goal of an investment. The key values in owning the right stocks involve attaching the right stock with the right timeframe. However, before that, you need to identify what kind of investor you are and your purpose of investing.
Many investors take up the long term strategy to earn passive and hassle-free rewards with the incremental growth of the company with buy-and-hold for many years based on the assumption that while there may be fluctuations in the market, it generally produces returns in the long-run. This rides out the panic caused by the short term volatility.
“Note to remember”
Short term volatility should not concern you as an investor. The stock market is going to move up and down, but wise investors know how to take advantage of that volatility. Like the wise man says, “Pain is inevitable, but suffering is always optional.”
Patience does pay – Remember it takes time to master the art of investing.
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