In case you haven’t noticed, the market’s big swings are back. And they’re back with a vengeance.
We’re only a few trading days into 2016 and there have already been some triple-digit price movements in the Dow Jones Industrial Average, including a 400-point drop. The combination of pessimism and a slowdown in China, and potentially the U.S., has many investors spooked. With that nervousness comes wild price swings, which incidentally causes more panic and price drops. And the cycle continues.
Volatility has once again come to roost.
But there are a few big issues with all of these prices swings and they can really do some damage to your portfolio (aside from causing you sleepless nights). But luckily there are ways to reduce a portfolio’s volatility that don’t involve trading futures or getting too complicated.