How Should An Investor Respond To The Market?
It’s extremely difficult to remain calm and to stay the course after the investment blood bath we experienced last Thursday. Pretty much everything was in the red at the end of the day Thurs. Stocks dropped 2.5%, commodity equities were down 3% and gold had the worst carnage of them with physical metal plummeting 5% and gold stocks tanking by 7.5%. So while doomsayers are selling their stocks and cutting their losses, is it better to follow suit and sell off? Or is it wiser to hang tight and ride it out until another rebound?
Market Trends vs. Market Volatility
One important thing to keep in mind is that one extremely bad day in the market is not indicative of a market trend. In other words, it is not a wise idea to make long-term investment decisions based on one poor day in the market. It’s a much better plan to take a step back, survey the damage, and make a decision without emotional influence on your next step. Following highlights a few ideas for you to consider as you’re evaluating some tough investment decisions.
Gold As An Investment Opportunity
Before you run for the hills, it is true that gold has had a rocky spring. However, the current low prices are indicative that things could be getting better for gold in the near future. In fact, many analysts predict that gold could see 20-30% increases or more in the next 18 months or so. In comparison to the average return on investment, that’s nothing to shrug off. Additionally, it is always recommended to look at gold as a long-term investment and to diversify at least 5-10 percent of your portfolio in precious metals for protection of your assets. What a better time to get into gold, than when the prices are at rock bottom?
ETFs In today’s Investment Environment
One thing that investors should be particularly cautious of regarding ETF’s is that ETF’s can be traded either higher or lower than their net asset value. Meaning, an investor (you) could pay too much for an asset at any given time, and be paid too little for the asset in return when you go to sell it. This could put you at a big disadvantage on days like last Thursday when the net asset value went through such a big swing.
Regardless of your decision, keep in mind that in any market there is money to be made. From precious metals, to shorting the market, there are plenty of opportunities out there to cushion you against the volatility of the market. For more information on how to stay ahead of the game and for help avoiding emotion based market decisions, speak to a Redhawk Wealth Advisor near you today.