Personal Wealth Management / Market Volatility

Ken Fisher Explains Stock Market Volatility

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher reminds everyone that stock market volatility is normal and shares tips to help investors cope with difficult market conditions. Ken believes that in order to experience stocks’ long-term average growth, it’s important to learn to endure occasional periods of volatility.

To help investors keep calm and stay focused on long-term outcomes, Ken recommends avoiding daily news headlines and checking portfolio balances frequently. Instead, focusing on enjoyable daily activities such as exercising or socializing with friends and family are healthy habits that can help investors stay on track to reach their financial goals. Lastly, if market volatility causes too much stress, Ken suggests working with a trusted investment advisor who can help you navigate tough market conditions.

Transcript

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Title screen appears, “Ken Fisher Explains Stock Market Volatility”

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Ken Fisher: So, people don't like volatility. The way they think of volatility is that when the market's up, it's good, and when the market's down, it's volatile, which is wrong, because there's upside volatility and downside volatility. And you really don't get a big up a lot market without volatility. It's just volatility you like and don't think of as volatility.

Ken Fisher: And because of that, you find yourself, if you want those big long-term returns, having to be subject to the volatility that comes, that's the kind you don't like. And for most people, that's not very pleasant. And the reality is, for some people, that's a lot more unpleasant than for others.

Ken Fisher: Some of us seem to have been imbued for some reason with just an iron gut on volatility. And in theory, you should have the view that if you get volatility to the downside, the unpleasant kind, you should like stocks more. Stocks are one of the rare categories where when stocks are up, people like it, and when they're down, they don't like it, but when they're down, they're cheaper.

So, you'd think you'd like it more looking forward. But people don't.

Ken Fisher: I've had people tell me all kinds of things that they do to cope with Volatility. From sucking their thumb to drinking alcohol to going out and taking a walk or other forms of exercise. And I hear from people that they can't sleep at night because of volatility. I can't really tell you how to sleep at night. That's not really my wheelhouse. But I want you to think about this in this way. And I think this is an example that I've used for years.

Ken Fisher: Think of a Civil War battlefield, General, the night before going into battle. Do you want him staying up, awake, unable to sleep for fear of what will happen tomorrow in a crisis time? Or do you want him to be able somehow, some way to get a good night's sleep so that the next day he's in good shape for all the chaos that will occur?

Ken Fisher: The latter, of course, is the preferable modality, and a good general in that circumstance should be able to be at peak performance on the day of that Civil War battle. In some respects, that's a little bit like market volatility. And if volatility really rattles you so much that you can't handle it, this is and this is going to sound like I'm making a commercial, but I'm not making a commercial. The reason for you to get somebody else to take care of it for you and then don't look at it. You. Really? If volatility bothers, you don't need to look at your portfolio very often. You don't need to read the news about what did the stock market do today? You don't need to pay attention to all the shrill yak, yak, yak. Because when the market falls, you'll see most pundits saying it's going to fall further.

Ken Fisher: You don't need to listen to that, You either are someone who volatility doesn't bother much, or if it bothers you a lot, get somebody else to handle your investments for you. Don't look at them very often, maybe twice a year, and just let it go. Spend your life focused on other things and don't make your investments a top-of-mind activity for your daily life. Thank you very much.

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Ken Fisher: Subscribe to the Fisher investment YouTube channel. If you like what you've seen, click the bell to be notified as soon as we publish new videos.

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A Series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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