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Summer is here, with longer days, warmer weather and family trips. Before you vacation, set up an investment checkup so you’re prepared for the possibility of bigger market waves ahead.
More than eight years without a drop of 20% or more means this is now the second-longest bull market. The S&P 500 is up more than 200%, and stocks have been rising pretty steadily, but with many pullbacks, since March 2009. But you shouldn’t be concerned about the length of the bull market. Fortunately for investors, bull markets don’t usually die of old age. They’ve frequently ended when bubbles burst or recessions emerged – and Edward Jones doesn’t think either is happening today.
Despite expectations that greater global uncertainty would trigger higher stock market volatility this year, stocks have been calmer than usual. But the Federal Reserve plans additional short-term interest rate increases, and politics remain in the headlines. Those could provoke more volatility. As you prepare for summer relaxation, make sure your investments don’t take a vacation. Edward Jones recommends four time-tested strategies to help you prepare for higher volatility and stay invested when stocks pull back.
Strategies like dollar-cost averaging and diversification cannot guarantee a profit or protect against losses, but may help you better weather the ups and downs of the market.
Staying invested is one of the most important strategies for long-term investors. Also, be prepared to “buy the dips.” Edward Jones believes the fundamentals – such as continued solid economic growth and improving earnings growth – remain positive, helping drive stocks higher over time. Those positive fundamentals are also reasons to use any pullbacks to add stocks* at lower prices. Remember that when stocks drop together, little attention is paid to quality, so corrections and other pullbacks can be opportunities to add quality investments.
Volatility is a normal part of investing. Make sure you’re prepared for market fluctuations this summer and beyond, giving you confidence in your long-term strategy.
*Equity investing involves risks, the value of your shares will fluctuate, and you may lose principal.
This information is for educational and illustrative purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation.
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