Broker Check

Patience and Agility

August 09, 2022
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Patience and Agility can be the difference makers in a market like this.  

We are seeing positivity in the market. July was a great month and a nice reprieve from this grueling down market. While we are very happy about the recent market gains, we want to remind you that we aren’t out of the woods yet.  

These charts and indicators above show that the S&P500 is warming up but take this information with a grain of salt because market volatility is still highThe economic head winds we are still facing can change things quickly. We see signs of positivity over the short to intermediate term, but the long term is still negative as seen in the VIX (volatility or fear index) chart below.  

What can an investor do?


Now could be a good time to add equity positions but, if you do, do it at a tepid pace. The market is overbought, and a pullback is warranted. Be on the lookout for these drops, as they can create better opportunities to enter the market.


A very good method for entering a market is through a strategy called Dollar Cost Averaging. This is a simple strategy that works very well no matter the type of market we are in. Simply put you buy a certain dollar amount of investments systematically over time. For example, a dollar cost average strategy could look like this; Buy $200 dollars’ worth of XYZ fund/stock every two weeks. Sometimes you will buy when the market is down and sometimes you will buy when the market is up, ultimately the cost for you getting into the market is averaged down based on the systematic purchases over time.

Because dollar cost averaging involves continuous investment in securities regardless of fluctuating prices, the investor should consider his or her financial ability to continue purchases through periods of falling prices, when the value of their investments may be declining. Dollar cost averaging does not ensure a profit or protect against loss.

 


The views stated in this email are not necessarily the opinion of Cetera Investment Services LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed .