Stay calm and keep a diverse portfolio

Stay calm and keep a diverse portfolio

Yakov Bart, an associate professor of Marketing at the Northeastern University advised the investors that despite being in a panic situation, they should stay calm and maintain a diverse portfolio to diversify the risk associated. The stock market had a tumultuous week with financial uncertainty because of COVID-19. The key method to tackle such an uncertain situation is to plan the type of securities you are investing in and to keep the emotions out while making decisions.

 

Diversification means having investments in the securities of different companies and industries. Diversification is not putting all eggs in a single basket. So Bart recommends investing in different stocks and bonds of different companies and industries. It is a common market phenomenon that the value of bonds increase when the value of the stocks tend to fall. He advises not to get too obsessed with the market by monitoring it every minute of the day. The best way is to set a scheduled time to check your investments with the prime motive of diversifying the portfolio. Bart added that despite selling the security at the downfall one should think long term.

 

Recently, the S&P 500 fell by nearly 8% and Dow Jones Industrial average by 2000 points. The sell-off rate was so high that it triggered a 15 minutes stop to all trading. The market recovered on Tuesday but the announcement of declaring COVID-19 pandemic by World Health organization led to a downfall again in the market. The fall of 1464.94 points on February 12 led the market to a bearish phase. Trump’s declaration of 30-days travel ban to European countries in response to the pandemic led to another circuit breaker, halting trading and the downfall almost 2353 points. There can be multiple reasons for what a market did and why, but this can’t be used as the base to predict what will happen.

 

Surabhi Garg

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Surabhi Garg

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