If anything is certain about investing, it’s that markets are constantly fluctuating–in other words, according to NASDAQ.com, “volatility is what makes the stock market the stock market.”
Take, for example, the recent US presidential election: stock markets plunged the evening Donald Trump was elected as the 45th US president as investors flocked to safe haven assets like gold for stability. The Dow Jones index lost 638 points that evening–a decrease of 3.4 percent–in futures trading. A similar scenario happened in June with the Brexit vote, as the index had a 610-point drop on June 24.
Despite the loss, the day following the election the index closed near the all-time high previously set in August.
Mercenary Geologist Mickey Fulp has long been adamant that lay investors should embrace volatile markets. Back in February 2012, Fulp wrote the blog post, “Embrace Volatility: A Primer for the Lay Investor.”
Given the fluctuation of the markets and investors flocking to safe haven assets, the Investing News Network (INN) had the chance to speak with Fulp about volatile markets and why investors should look at them positively. Putting it simply, Fulp said investors should embrace volatility for its entry and exit points with an increase of liquidity.
In Fulp’s blog post, he goes into more detail and describes volatility as “the reasoned and seasoned speculator entry and exit points to generate trades and pocket repeated gains.”
“More volume leads to higher market caps, so from my point of view it’s good,” he said in our interview. “You have to remember not to worry about things you don’t control, so take the paradigm you’re given and learn to profit from it.”
Particularly, Fulp said it’s important for investors to remember there’s no profit or loss until a stock is sold, and speculating in stocks really isn’t investing.
When it comes to long and short term volatility, Fulp said there’s only one reason to buy a stock: because investors think it will go up. He noted that investors need to look at the stocks they’ve bought and determine at what point it becomes a sell, and whether to take a profit or loss from it.
“Stick to your guns, stick to the original reasons you bought it,” he said.
Of course, it’s natural that emotions run high when the markets fluctuate and when there’s uncertainty at bay. Because of this, Fulp stressed it’s key that investors should not be motivated by emotions.
“We all can get emotional about what’s going on in the stock market, but it’s not good,” Fulp said. “Be clear thinking without the emotions; they’re mainly greed, panic and fear affecting your trading.”
With all of this in mind, of course, investors will make their own decisions on where they stand on volatility: one can be either intimidated by it or embrace it.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.