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Markets on a roller coaster ride. Volatility means opportunity, experts say


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Lately, the U.S. stock exchange has experienced a rollercoaster ride.

After a chaotic trading session the day before that saw some of history’s largest gains, stocks slumped on Tuesday.

The Dow Jones Industrial AverageAfter rallying from an approximately 1,100 point deficit Monday, Tuesday’s session saw a 400-point drop. It is the S&P 500After briefly entering correction territory on Monday, the stock market fell by 1.7%. This is a 10% drop. Tech-heavy Nasdaq CompositeEarly in the morning, more than 2% was traded lower.

Although whiplash can cause anxiety for investors, experts advise against jumping to conclusions when markets plummet. Investors may be able to purchase more stocks they like and position themselves for future profits.

Volatility is the norm 

Investors should all be aware of these things accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Carlsbad, California-based Seaside Wealth Management.

He stated, “Embrace the Volatility. It’s why Investors are being Paid to Own Stocks.”

Investors should remain calm, even during extreme moves. Although stocks move in both directions, the long-term return on stock market investments is still determined by dividend yields and earnings growth, Zach Abrams of Capital Advisors Shaker Heights (Ohio) says.

Prepare for any emergency 

Although stock market volatility may be beneficial in the long term, advisors advise that you keep a cash-flow emergency fund so that you can weather any market turmoil without losing your investment. Retirees especially need to have a cash emergency fund.

Tony Zabiegala is the chief operating officer at Strategic Wealth Partners in Independence, Ohio. He advises that it’s better for you to invest the cash in an emergency fund rather than selling assets at a loss.