It seems that Market Volatility is getting worse lately and it comes in waves that no economist seems to be able to answer in any satisfying way. Some traders even try to profit on it by riding short-term waves up and cashing out before they crash. If this sounds like gambling to you, odds are you are right (pun intended).
Market volatility may seem like the rule rather than the exception.
Unless you want your investments to make you feel like you are riding the white water rapids, market volatility may be telling you something.
We see this as a warning sign to exit the stock market and look for more stable assets.
For our purposes Market Volatility refers to two types of economic events:
-Relatively large market price fluctuations within a given asset class
-Contradictory movements in market prices between asset classes and other economic forces or indicators
Large price fluctuations are often a symptom of anxious and confused investors. Short term traders, automatic trading (triggered by computer algorithms) and so-called “dark markets” (trades made outside of the regular stock market) can also contribute to more market volatility and are becoming more common. Some experts claim that more trades are now made by computers than human beings.
Contradictory movements in prices are often driven by artificial manipulation rather than free market forces. An example is the stock market rocketing to record high levels while unemployment remains in double digit territory and real GDP is flat.
While the mainstream media makes up stories to explain these strange events, there are good reasons why they are becoming more common and harder for the “gurus” to predict. There is an underlying rot to the way our financial system is functioning, with record levels of debt at all levels (private, corporate and government).
The economic outlook doesn’t match what the media and Wall Street pundits say. There is a disconnect and that alone should give you pause before you rely on paper promises for your financial future.
If it doesn’t make sense that the government can spend trillions of dollars each year, racking up a national debt as large as the United States’ annual GDP and yet the stock market continues to grow, then you may be smarter than most economists.
Many investors are uncomfortable under such conditions and are just looking for a way out. Safety should be your first concern when markets are more unpredictable than usual. Wealth preservation means taking a portion of your wealth and moving it into stable, tangible assets.
True diversification is owning some tangible assets along with your paper assets. At least some of your portfolio should include physical gold and silver. Gold is more stable than most other assets, particularly when governments and banks are playing fraudulent games with peoples’ savings and retirement.
Don’t be fooled by financial advisors and gurus that call various paper assets “diversification.” These Wall Street junkies are unfamiliar with anything outside of their paper asset sphere of influence. They don’t sell anything other than paper, so it is in their best interest (not yours) to sell you more paper.
Take a closer look at how to preserve your wealth here.