Many of my BloggingStocks colleagues are writing pieces on Stocks for a Volatile Market. I like some of the picks, but at the risk of offending whomever came up with the idea for this series, I don't think it makes any sense. Many, probably even most, of the pundits will disagree with me here, but I don't think we should do anything different as investors because the market has been volatile.
The idea of this exercise amounts to personification of markets which, while tempting and common, is a mistake. The notion picking stocks for a volatile market would make sense if markets were like weather: When there's a storm, hunker down, bolt the doors, and sit by the fire and drink hot chocolate. And the same applies to investing, or so the thinking goes. There's just one problem: the stock market is a discounting mechanism arguably prone to wild gyrations disconnected from investment fundamentals. It's not the weather. The idea that a person should own certain stocks and sell other stocks because the market has been volatile -- down 7% from its all-time high not too long ago -- just strikes me as inane.
So what should investors do in light of the volatility? I believe that it's foolish to try to time the markets and, if you have a long-term investment horizon, continue to invest in low-cost index funds. History has shown that this is the best thing most people can do with their money.
See all the posts in this special report:
- Volatile Markets: 11 stock plays for turbulent times
- Volatile Markets: Stick with General Electric (GE)
- Volatile Markets: Huaneng Power (HNP) is my pick for the next 50 years
- Volatile Markets: Target (TGT) is the retailer of choice
- Volatile Markets: Bank of America (BAC) offers low risk, high reward
- Volatile Markets: Starbucks (SBUX) is ready for a comeback
- Volatile Markets: Coca-Cola (KO) is the Real Thing
- Volatile Markets: Bet on Boeing (BA)
- Volatile Markets: Ride FreightCar America (RAIL)
- Volatile Markets: Anadarko Petroleum (APC) has valuable fuel reserves
- Volatile Markets: Dip makes Posco (PKX) a bigger bargain
- Volatile Markets: Steven Madden (SHOO) will wear well
- Volatile Markets: Precious metals are the safest place to be
- Volatile Market: Just ignore it; don't try to time it
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