Stock Market Roller Coaster Continues...Is it Time to Buy?
Today's U.S. stock market action featured a 600 point intraday swing in the Dow Jones Industrial Average.
Has the market regained its footing? Is it safe to buy stocks now?
Ultimately, only time will tell. I suspect that the volatility will continue for a while, as more and more companies report their quarterly earnings, and as various stimulus packages or interest rate cuts are debated.
If you have cash to invest, I recommend that you use dollar cost averaging to gradually buy into the market, instead of putting all of your cash to work at once. Dollar cost averaging is just a fancy name for breaking up your investment purchases into a number of pieces, as this is another way to diversify your portfolio, beyond asset classes, countries and market sectors. Here, you are diversify the time component of your investment program and reduce the possibility of investing your funds at a market top.
If the market declines after you have started your dollar cost averaging program, then you will be able to buy more shares later at a lower price. If the market increases, then you will end up paying more for those subsequent purchases, but your overall risk should be lower by using the program.
Has the market regained its footing? Is it safe to buy stocks now?
Ultimately, only time will tell. I suspect that the volatility will continue for a while, as more and more companies report their quarterly earnings, and as various stimulus packages or interest rate cuts are debated.
If you have cash to invest, I recommend that you use dollar cost averaging to gradually buy into the market, instead of putting all of your cash to work at once. Dollar cost averaging is just a fancy name for breaking up your investment purchases into a number of pieces, as this is another way to diversify your portfolio, beyond asset classes, countries and market sectors. Here, you are diversify the time component of your investment program and reduce the possibility of investing your funds at a market top.
If the market declines after you have started your dollar cost averaging program, then you will be able to buy more shares later at a lower price. If the market increases, then you will end up paying more for those subsequent purchases, but your overall risk should be lower by using the program.
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