Tag: marketcrisis

What To Do Financially In Response To Market Volatility And Global Uncertainty

With everything going on in the world right now, there is a feeling of general unease blanketing our nation. While I cannot speak to the politics of foreign governments, I can mourn for the lives lost in the current struggles and share my thoughts on how I see the markets reacting.

“It’s different this time.”

These are the words overheard every time there is a market correction, and they are both true and false.

True: the world events and news du jour precipitating each market correction creates a unique blend of circumstances.

But false: the responses to and best practices during and after a correction are not different this time. The fundamentals are unchanged. Regardless of the news headlines, all investors are still either buyers, holders, or sellers. The only thing different during today’s market correction versus prior periods of volatility is that we are each older than we were the last time this happened, so we may be at different stages of our financial lives.

The strategies and advice for this period of volatility are the same as the last time. If you are a buyer (adding to accounts regularly), stay the course and try to take advantage of the volatility. If you are a holder (neither adding to nor withdrawing from accounts), make sure you have no expected need for invested capital for the next five years and sit tight.

If you are a seller (withdrawing from accounts regularly), make sure you have short-term and intermediate-term accounts which are positioned conservatively and allow your other longer-term accounts to stay fully invested.

We have been through tough markets before, and we’ll go through them again. The most important lesson we can learn from the past is to not repeat the same mistakes. Investors who took advantage of being buyers or resisted change as holders or sellers made out beautifully by staying put. Those investors who were positioned inappropriately or who were positioned responsibly but reacted emotionally suffered significant financial damage.

Don’t just do something, sit there.

That’s not a misprint. Sometimes the best advice is to do nothing–to not react to the news cycle day-to-day. Invariably, this is another opportunity to take that advice. If your portfolio is structured well, it should be able to withstand whatever comes our way. Take a deep breath and remember that this is a marathon, not a sprint, and do nothing.

We’re coming out of a two-year global pandemic with a recovering supply chain and pent-up consumer demand. The Russian actions in Ukraine are reprehensible and may impact energy prices and delay the economic recovery from the pandemic, but like all news stories this one will be the daily headline until it isn’t, and it will be replaced by something which feels “different this time” soon thereafter.

The lesson:

You can take the time to emotionally react to the news of the world, but I would advise you never to act emotionally regarding financial decisions.

If you do not feel your portfolio is structured to withstand market corrections, this may be a good time to speak with your financial advisor or to get a second opinion from a different one.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual.

It is suggested that you consult your financial professional, attorney, or tax advisor with regards to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.

Eric Brotman

Eric Brotman

I have been in the financial planning and wealth management industry since 1994, and launched a firm in Maryland in 2003. My passion is helping

Source: What To Do Financially In Response To Market Volatility And Global Uncertainty

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Critics:

  • The world became a very uncertain place in the last week, which means more risk in many aspects of our lives, especially markets.
  • For the last decade or so, markets seemed to only go up; since the pandemic, risk became a bigger issue.
  • Volatile investors expect markets to be over the next 3 months based on options prices.

The world became a very uncertain place in the last week. This means more risk in many aspects of our lives, especially markets. For the last decade or so, markets seemed to only go up, but since the pandemic, risk became a bigger issue.

The figure below is the 3-month implied volatility from the S&P 500; it shows how volatile investors expect markets to be over the next 3 months based on options prices. We see a big increase in the early days of the pandemic, before settling into a higher range.

Global Uncertainty

Between uncertainty around Fed policy and events in Europe, we can expect even more volatility going forward. Many households came out of the pandemic with more wealth than before, and this fueled the recovery. But if markets stay so volatile, their 401(K)s will take a hit and people will start to feel much less secure.

More contents:

Investments Impacted By The Russian-Ukrainian Conflict

Emerging Market Sovereign Debt Needs ESG Scrutiny

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The Market Crashed & You Lost a Lot of Money Here’s What To Do Next

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The coronavirus crisis has left millions unemployed, sick and under financial strain. The last thing many of us want to do right now is look at our investments.

If you haven’t yet, try not to. Through March, the S&P 500 had the worst quarter since 2008 while the Dow Jones hadn’t seen a drop this bad since 1987. And in May, Federal Reserve Chair Jerome Powell warned of a “prolonged recession,” leaving many wondering if the worst is yet to come.

Chances are you’ve already looked at your portfolio and you’re anxious about the cash you’ve lost. That feeling is normal and you’re not alone. But if you’re wondering what to do with such a tumultuous market, there’s an easy answer: nothing.

Before you make drastic moves with your investments, see which ones are best for your finances right now.

1. Assess the damage

You’re probably panicking. Watching your investments wash away in a matter of hours, days or weeks isn’t exactly a fun time. But instead of freaking out, use this time to see which investments are worth keeping and which ones to drop.

Use this time to evaluate long-term goals. Are you OK with losing more money — even in the short term? There’s a chance your earnings will continue to drop and if you need your money within the next few months to a year, you might need to move it to a more stable account, like a high-yield savings account.

It might be time to cut your losses for some securities and use that money elsewhere. If you need the cash, use it. Otherwise reinvest in the market, whether in stocks you can buy cheap or dividend-paying stocks, where you’ll get a cash-out every month or quarter.

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Read more: Five investment accounts everyone should have

2. Evaluate your portfolio

The stock market continues to rapidly rise and drop every few days. And if you judged the US economy based on the stock market alone, it looks like we’re in a strong recovery (we’re not).

If you have extra cash on hand, invest in the stocks that were once too expensive for you. The strongest companies will most likely be here when the crisis is behind us. Look at the costs and see which ones you want to add to your investments.

You may also want to check in on companies and sectors you haven’t invested in. For instance, health care and industrials might be something to explore.

3. Dial back stock-only investments

While your portfolio should already be diversified, now might be the time to consider a conservative move. If you’re closer to retirement, look at more conservative investments. Some securities invest in stocks, bonds, CDs, real estate and other types. Consider diversifying in:

  • Exchange-traded funds
  • Index funds
  • Mutual funds
  • Annuities

Lower-risk investments are a safer bet, even if they are still risky.

Read more: Investing and saving during coronavirus: Here’s what to prioritize

4. Stick it out

It’s easy to balk when you see investments plummet. But the younger you are, the more likely you are to enjoy a stock market rebound. The 2008 recession lasted a year and a half but most recessions last less than a year. (The other exception is the Great Depression, which lasted nine years.)

Because most recessions are short-lived, take a moment to remember that the stock market plunge is short-lived, too. Once you’re on the other side of this, you’ll see your investments thriving — maybe even better than they were before.

5. Liquidate if you have to

While younger folks might have the luxury of riding it out, not everyone can afford it. For one thing, you might be closer to retirement. This means you can’t afford to take bigger risks — including waiting for a rebound that you aren’t sure will come before you stop working.

If you’ve lost your job or you’re facing significantly reduced hours (and a lower paycheck), you might not feel comfortable keeping your money in the stock market any longer than you need to. Taking your money out isn’t a bad thing if it’s a need. It’s better to cover your costs instead of going into debt just so your investments can earn a little more later on. If you need it now, use it now.

By: Dori Zinn

Source:https://www.cnet.com

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Record Unemployment Has Contributed To A ‘Striking’ Shift Toward Bitcoin, New Research Reveals

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Bitcoin interest has surged in the wake of the coronavirus pandemic and the unprecedented measures undertaken by governments to contain it while propping up the global economy. The bitcoin price has bounced back to almost $10,000 per bitcoin after crashing to under $4,000 during the broad March coronavirus sell-off. Now, new research has revealed the extent public opinion has shifted toward bitcoin since 2017—with almost half of millennials “likely” to buy bitcoin within the next five years.

“With over 20 million Americans currently unemployed, the public narrative towards bitcoin has changed,” researchers at financial information platform The Tokenist wrote, summarizing their findings. “The results are striking. We found increased knowledge of, and growing confidence in, bitcoin among all age and gender groups surveyed. This effect was most pronounced in millennial respondents, 45% of whom would now preferentially invest in bitcoin over stocks, real estate and gold.”

As the coronavirus Covid-19 swept across the U.S., the unemployment rate soared to almost 15% in April, the highest level on record, with millenials among the hardest hit. In February, the unemployment rate was at a half-century low of 3.5%. The survey, which gauged how market fluctuations caused by Covid-19 has affected people’s view of bitcoin, revealed 47% of people trust bitcoin over big banks, an increase of 29 percentage points over the past three years.

Meanwhile, 43% of respondents, and 59% of millennials, thought that most people will be using bitcoin within the next decade and 44% of millennials report that they are likely to buy bitcoin in the next five years. “These data indicate that bitcoin has a bright future, and will likely benefit significantly from the current market crisis,” the researchers wrote. “With confidence in traditional investment instruments decreasing, bitcoin stands poised to offer investors an alternative, long-term store of value.”

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The research chimes with reports from the bitcoin and cryptocurrency community that coronavirus and its ramifications has boosted interest in bitcoin. “The surging activity we’ve seen since the beginning of 2020 has been in part inspired by the Federal Reserve’s unprecedented monetary intervention,” Alex Leishman, the founder of River Financial, a San Francisco-based startup bitcoin brokerage and financial services firm that has seen its client base double every month this year, said last week.

Growing interest in bitcoin from “seasoned macro investors” like Paul Tudor Jones, Dan Tapiero and Raoul Pal is legitimizing bitcoin “within the mainstream finance community,” according to Leishman. “The evolution of finance is only happening faster in the wake of the current global economic crisis, which has illuminated holes within traditional financial systems that can potentially be filled by bitcoin,” said Olaf Carlson-Wee, founder of hedge fund Polychain Capital, who recently led a River funding round.

The Tokenist surveyed around 5,000 people through April 2020, comparing the findings to surveys carried out by brokerage eToro, investor Blockchain Capital, and personal finance website BankRate in 2017.

Billy Bambrough

Billy Bambrough

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported

More than two million Americans requested unemployment compensation for the first time last week, which may or may not affect Bitcoin. Recording its seventh consecutive week of decline, last week hosted 2.44 million new unemployment claims, CNBC said in a May 21 brief . These numbers, however, fall within range of economist expectations. Within the timeframe surrounding coronavirus, Americans have posted 38.6 million jobless claims to date, CNBC said. Morgan Creek Digital co-founder and partner expressed a push of sentiment favoring a national reopening after weeks of business closures and shelter-in-place orders, which have increased job loss numbers.”We have to get the economy open and put people back to work safely,” Pompliano said in May 21 Tweet citing recent unemployment numbers. Do the recent job loss numbers affect Bitcoin
All data is taken from the source: https://cointelegraph.com/ Article Link: https://cointelegraph.com/news/recent…
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