Market volatility is an omnipresent threat for investors. During such periods of unpredictable economic trends and fluctuating market performances, making the wrong investing moves can dent your financial prospects severely.
Following the profitability-based investment strategies as advised by Rani Jarkas Cedrus Investments, investors can outperform market downturns and maintain consistent portfolio stability to not only emerge faster but better from the stages of volatility.
What is a volatile market and what are its characteristics?
The rapid price swings and unpredictable market trends signify its volatility. It is referred to as a quantification of the speed and magnitude of price swings for assets. Grater market volatility means a must faster and bigger price swings observed for assets. For an asset, a shift in its market price denotes its volatility and thus can prove detrimental for investments.
Market volatility demands investment strategy modification so as to accommodate essential measures of recovery and risk mitigation in order to preserve the overall profitability and safety of a portfolio.
The key features of a volatile market are –
- Volatility cause deviations of expected returns on investments
- Asset values and process change frequently and unpredictably
- The magnitude of volatility depends in the level of asset price deviation
- Volatility is a measure of the dispersion of returns
- Volatile assets are very risky to invest in
- The variance of asset values in a market is a feature of volatility
Investment strategies to overcome risks of volatile markets
Increase in volatility causes an increase in risks. Both result in loss of investment performance and profitability. Making investment portfolios vulnerable to severe losses, market volatility demands optimum patterns and strategies of investing so as to make possible better and stable recovery and safety against the same.
The best ways to safeguard investment profitability and expected performance is to follow the following strategies as devised by the financial services executive Rani T Jarkas Hong Kong –
- Practise hedging against market volatility
Hedging against the possible losses from market volatility is an effective strategy to maintain a profitable portfolio. One way to do so is by buying protective put options which best protect against losses which enable selling shares or assets at a pre-determined price as per the contract.
- Prefer non-direction investing
Without the need for markets to perform consistently in a singular direction, non-directional investing is better suited to perform during volatility and enabled an investor to take advantage of the market inefficiencies so as to succeed during periods of downturns.
- Avoiding market volatility
One way to prevent portfolio disruptions and investment losses is to ignore short-tern asset price deviations or swings. If you maintain a diversified portfolio as suggested by Rani Jarkas Firm Cedrus Investments, you are better positioned to play dormant during a volatile market.
You can learn the best investment tips and tricks from Rani Jarkas financial service on https://www.ranijarkas.com/.