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How to Ride the Economic Wave (and Diversify Your Risk)

Frequent market ups and downs create a highly volatile stock market. Note to Investors: Make your adjustments sooner, rather than later.

One of my colleagues, Nanette Lee Miller (Partner, Assurance Services, Marcum LLP, shared a nugget of wisdom she received from financial advisors in the investment community. It’s a new potential paradigm. There is a lesson here for all of us. Take a quick read:

Ooooh, Bubbles…
“Previous to where we are now in the stock market, people were talking about the dot.com bubble that burst and ten years later they were talking about the savings and loan crisis bubble. The common wisdom was that we would have these bubbles or stock market corrections every 10 years or so; i.e., they were thought to be cyclical in nature and of a multiyear or decade duration.

Buffer the Burst
After the see-saw volatility we have recently seen, there seems to be a new common wisdom.  We will have over the near future a frequent bubble bursting stock market, meaning we will have frequent ups and downs creating a highly volatile stock market; as investors make adjustments sooner, rather than later.

Ride the Wave
This means as an investor, you need a plan and have to be patient with it during the up and down portions of the ride as long as the trend is getting you in the right direction.  Further, the right combination of stocks can potentially lessen the volatility.”

What do you think? Do you agree? Share your thoughts in the comments below!

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