The stock market is inevitably volatile. Its nature is to rise and fall in the short term and level out in the long term. However, following the ups and downs of an unstable market is especially stressful during a pandemic that has impacted the global economy so heavily.
Watching your investments fluctuate rapidly can be disheartening, and you may be uncertain about what you should do next—or just as importantly, what you shouldn’t do. Below, the members of Forbes Finance Council share 13 investment “don’ts” to help you navigate this turbulent time in the stock markets.
Members of Forbes Finance Council share investment moves you should avoid during times of market fluctuation.
Photos courtesy of the individual members.
1. Don’t buy low-quality stocks.
Market volatility such as we are experiencing this year can often entice investors to buy stocks that have been beaten down and are of low quality in terms of profitability and balance sheet strength. These should be avoided! Market volatility of this kind is an opportunity for investors to upgrade the quality of their investment portfolio by selling troubled investments and buying better quality. – James Demmert, Main Street Research
2. Don’t lose sight of your priorities and goals.
All of us will have both short-term needs and longer-term goals. When reevaluating your investments, be clear on which of these two the investment serves. If you have near-term priorities that require cash, then raise that cash. But once you have covered those, ensure you stay invested for your long-term goals too. – Jonathan Hudacko, Just Invest
3. Don’t let anxiety make the decisions.
Don’t allow fear and anxiety to cloud your decision-making. Investment positions should be long-term bets based on long-term fundamentals. Arguably the most fruitful investing occurs during times of market volatility and uncertainty. Drown out the anxiety and fear and focus on long-term, fundamentally sound investments that can be purchased below their long-term value. – Ryan Swehla, Graceada Partners
4. Don’t panic.
In times of marketing volatility, it is very important to think rationally. There are many factors to consider before making moves within your portfolio. Most market corrections are relatively short-lived, and even in extraordinary times, the market tends to rebound and outperform its previous records. If you hold tight, you can likely recover any losses and even come out better. – Justin Brock, Bobby Brock Insurance
5. Don’t go for penny stocks.
People tend to prefer to buy cheap stocks. They have the idea that they are getting a “better price” or “deal” than when they buy blue-chip stocks like Amazon and Apple. A huge don’t, especially in times of uncertainty, is to invest in no-name stocks. There is a reason why penny stocks are worth cents. Sure, you can hit the lottery from time to time, but the risk-reward ratio is not worth it. – Gabriela Berrospi, Latino Wall Street
6. Don’t stray from your financial plan.
Someone once told me that the only certainties in life are death, taxes and market volatility. As such, it is important to know the value of your investments and stick to your financial plan. Don’t let your emotions take over. Speculative, fear-driven actions often lead to financial consequences. – Robert Reeder, GlassView
7. Don’t wing it.
Most people never get lucky with the market. If you’re really interested in participating in the market during extreme volatility, you should seek the advice of a professional to help you navigate and minimize your mistakes. – Drew Gurley, Redbird Advisors
8. Don’t check your accounts every day.
In times of uncertainty and market volatility, our natural tendency is to want to know the impact on our personal finances. If you know the market is low, checking your balances and seeing them lower will only make this cycle worse and cause you to want to make an emotional decision. Don’t look and know that the market will come back. – Kelly Shores, GCubed, Inc.
9. Don’t ignore the lesson about planning.
The times that we are living in are teaching us an important lesson about planning that we shouldn’t ignore. Don’t wait until a market crash, pandemic or crisis to diversify your portfolio. Whether you do so through your IRA or personal funds, investing in intangible assets like gold, real estate and other alternative investments may help avoid massive losses when the market goes sour. – Jason Craig, IRA Resources, Inc.
10. Don’t act on stale data.
In a rapidly developing environment, a lot of information is stale. Analysts have not yet reduced the EPS forecast to reflect the new reality. Rating agencies take time to lower firms’ credit ratings. Economists are slow to cut the GDP growth forecast while a deep recession appears inevitable. Firms do not cut dividends immediately, and dividend yields may seem abnormally high. Don’t make the same mistake. – Cutler Knupp, The Haskell Company – Dysruptek
11. Don’t ignore the potential risk impact.
If the volatility in your investments makes you highly uncomfortable, it’s time to check in on the level of risk your portfolio carries. Depending on your current financial state and place in life, risk tolerance changes over time. Once the market levels off, look into adjusting your overall portfolio to something you are more comfortable with maintaining. – Jared Weitz, United Capital Source Inc.
12. Don’t sell based on a negative return.
Don’t think with your heart when you view your investment statement. A negative return does not always mean that positions should be sold. In fact, if you had previously developed a clear financial plan and allocated your investments to align with this plan, nothing has truly changed to warrant an allocation change. – Meredith Moore, Artisan Financial Strategies LLC
13. Don’t get too excited about ‘up’ days.
Bear markets can be an excruciating rollercoaster not only because they go down, but also because they come with several relief rallies. This is the time when optimism briefly re-emerges before getting squashed by another leg down. If you want to grow your positions, do so on “down” days and try to refrain from getting too excited about “up” days. Too many buy high and sell low, repeatedly. – Felix Hartmann, Hartmann Capital
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
