Stock Investment in a Volatile Market

www.ProfitableInvestingTips.com – Stock Investment in a Volatile Market Is stock investment in a volatile market profitable or is stock investment in a volatile market dangerous? This question comes to mind as the NYSE and NASDAQ go up or down more than five percent of their capitalization in a trading day. This seems to be happening more often than any time in the last eighty years, when the worst stock market crash ushered in the Great Depression. Stock investors rely on fundamental analysis of stocks. A stock with a good margin of safety and intrinsic stock value is thought to be a good investment. Long term investors typically scout out good stocks and then wait for a correction in a volatile market to buy goods stocks at cheap prices. The stock market tends to adjust for fundamentals. However, when fundamentals are uncertain there tends to be a lot of adjusting. That can make stock investment in a volatile market a risky endeavor. How does a prudent investor approach stock investment in a volatile market like we see today? There are a number of long standing caveats to investing. First and foremost smart investors diversify their holding and thereby limit their investment risk. Investors typically pick several market sectors and purchase a stock in each sector. Because different market sectors react differently to changes in the economy the stocks in these sectors will often balance each other out. For example when oil prices go up big oil stocks will rise as well …