Opportunity in uncertain times
Market volatility can feel like an investor’s worst nightmare. But if you take a few simple steps to prepare and know how to resist the emotional response we’re hard-wired to react with, then you can keep a calm head when it arrives - and even find opportunity.
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What is volatility?
Volatility is an investment term for when the stock market experiences periods of unpredictable, and sometimes sharp, rises and falls. During such falls, the warnings you see on our website are even more apt: The value of investments can go down as well as up, and you may get back less than you invest.
People often think about volatility only in connection to dramatic drops in prices, but it can also refer to sudden rises as well. So, it’s really just a way of describing a market that’s going through some turbulence. Volatility is caused by a wide range of economic and political factors. From news affecting a particular industry sector, to government policy changes, political tensions or upheavals; anything that creates uncertainty and causes some investors to sell and others to buy can lead to volatility.
In a volatile market prices aren’t always an accurate reflection of real worth. A sudden swing up or down can make an investment suddenly seem worth more or less than it really is over the long term. This is partly why long-term investing makes sense, and why it’s worth taking full advantage of ISA and SIPP allowances.
Below we discuss strategies and tactics that investors can use to deal with volatile markets. Please note that Navigator is not a personal recommendation in respect of a particular investment. If you need additional help, please speak to an authorised financial adviser. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.
Learn more about volatility
An intro to volatility and risk
Understanding the difference between volatility and risk can help you deal with unnerving markets.
Regular savings and volatility
Making smaller investments at regular intervals can remove some of the worry about when to invest, and help you take advantage of changes in price.
Diversification and volatility
Holding a diverse range of asset classes in line with your goals and risk tolerance will help minimise the impact of one on your portfolio.
Investment ideas to prepare for volatility
Choose a risk level with Navigator
You can use our Navigator tool to choose a risk level you are comfortable with. The tool will give you a choice between two multi asset funds that match your risk level.
Fidelity Select 50 Balanced Fund
This fund has a medium-risk profile that allows it to hold a diversified spread of funds that invest in different asset classes including bonds and gold.
Share dealing in volatile markets
What has the impact of choppier markets been for investors this year? To answer this our Investment Director Tom Stevenson spoke with Alex Skrine, head of electronic trading at Winterflood Securities, one of London’s leading market makers.
He explains the link between volatility and trading volumes, he talks about how a company’s size can affect the price and availability of its shares, and he sets out how investors can protect themselves from the unexpected.
How to stay calm in the face of volatility
Staying composed takes a rational mind, but this is difficult when we're hard-wired to feel the pain of a loss twice as much as the joy of a gain.
In this article Dan Lane considers how we manage our emotional responses to the ups and downs of the market.How do you deal with volatility?
How volatility can be your best friend
As uncomfortable and as unwelcome as volatility is, it is survivable and, even more importantly, it can provide good opportunities.
In this article Emma-Lou Montgomery gives us ten important lessons on how to manage volatility.Why volatility can be your best friend
How some of our customers manage volatility
Ed Monk meets some experienced investors to learn how they manage market volatility.
Understanding market volatility
It can be worrying when stock markets go down. Our guides will help explain what to do - and what not to do - during times of uncertainty.
Putting time on your side
How history shows that a five to ten-year view makes sense.
When doing nothing is best
The wisdom of sitting tight during uncertain periods.
Managing investments in uncertain times
What volatility is, and how to deal with it.
The objective of this section is to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by any Fidelity entity or any third-party.