As investors, we love seeing the markets rally and our account balances increase in value. But when the markets fall, it can really test our mettle. Despite the uncertainty you may feel when a volatile market takes you on a roller-coaster ride, one thing is clear: As investors, we should prepare for the bumpier experience ahead.
Resist the urge to panic and sell all of your shares. Although market movements over the last few weeks may have caused you anxiety, what we’re actually seeing is a return to normal market conditions.
For the past few years, interest rates were kept at near zero, helping to suppress market volatility. As the Federal Reserve brings its bond-buying program, known as quantitative easing, to an end, the market is now turning its attention to the Fed’s timeline for raising rates. Such a transition back to “normal” monetary policy makes it clear that volatility will likely rise, along with investor uncertainty.