Taking Advantage of Stock Market Volatility

It’s been a roller coaster ride these past three weeks as stock markets around the world have been rising and falling drastically, with some of the major indexes loosing up to 7% in a single day. Stock market volatility scares many people but it’s really an opportunity to make money much faster. Most retirement accounts suffer however, because even though money is well diversified, most people simply buy and maintain a long position with the same companies they invested in years ago, which allows them to only make money when stock prices rise.

Unfortunately, there is no safe place to keep your money and expect a positive return on investment over a long period of time without actively managing your money.  Yet millions of seniors around the world trust financial advisors who sell them standard mutual funds that go up and down with the market. To learn more about stock marketing visit this source. All companies, currencies and commodities fluctuate and must be bought and sold as a result of news specific to your investments and external factors that indirectly affect your portfolio. There isn’t a single company that can guarantee their stock price will perpetually trend upward, yet the large majority of people only make money when the stock prices go up and loose when the stock market goes down.

If I am going to trust a financial advisor with my money, I want to know that he or she spends most of their time reviewing financial statements and is actively buying and selling shares in companies as a result of news being reported in which I have a financial interest. In this day and age it is possible to profit when stocks loose value by short selling. Investors that short sell make money when stock prices decrease by borrowing and selling shares then buying it back once the price drops.  Most financial advisors, however don’t actively follow the latest news concerning your investments and are just as clueless as their clients as to which stocks could potentially rise or fall off a cliff. Many financial advisors are just salesman that put your money in a diversified mutual fund that only makes money when stock prices rise and never bother to look at it again until you’re ready to retire.

It’s ludacris to believe you will make money in the stock market if you keep all the same positions in the same companies without ever buying and selling when necessary. The Dow Jones for example is at the exact same price now as it was in 1999, meaning if you invested in the thirty companies in this index you are in the exact same financial position as you were 12 years ago minus inflation and the decline of the U.S. dollar which has plummeted in comparison to other currencies. You don’t have to be a day trader to make money, but you do have to look at the state of the economy and news relating to your investments if you hope to be successful. If a credit ratings agency for example, downgrades U.S. debt or top executives are dumping shares in their own company, chances are stock prices will likely go down. If the federal reserve says they are going to cut interest rates, you can bet stock prices are going up. There are many indicators that give us a general sense of which direction stocks will move, but chances are your money remains untouched and no one bothers to take appropriate action even when the most obvious signs exist.

The bottom line is you can’t invest and forget about your money and hope the value of your portfolio will steadily increase in value, yet millions of Americans have 401K’s and IRA accounts and don’t know how their money is being invested. If you want to be successful in the market or even just break even, you have to be proactive and constantly buy and sell shares in different companies, commodities and currencies. You can do this all yourself with online brokerage accounts like TD Ameritrade, Fidelity, E-Trade among many others. If you don’t have time to manage your money or don’t trust yourself, find a financial advisor or a fund with a proven track record. Your money needs to be placed in an account that is just as capable of making money during a recession as it is during good economic times.

As bad as the mainstream media portrays stock market volatility it provides a good opportunity to make money. By shorting certain investments you think will loose value and going long on those you are bullish about you aren’t held hostage when the economy goes South. On the contrary you will welcome the volatility in the market.

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