Nasdaq Could Fall 13% — Why You Must Keep Volatility in Perspective
When we have major sell-offs like Monday, we have to try to see the forest for the trees and keep stock market volatility in perspective. The forest of course being the stock market indexes, and the trees being the stocks we own.
Big sell-off days can create a lot of fear and confusion, particularly for younger or newer investors. So it’s especially prudent to keep stock market volatility in perspective in times like these.
Because I expect to see more selling in the coming days…
Why You Should Keep Stock Market Volatility in Perspective
Sell-offs are how the stock market and its individual indexes change leadership. It’s best to keep your focus on that. Try not to focus so much on what’s happening with the big-cap tech stocks.
That’s where institutions and frankly most individual investors are weighted right now. That’s understandable. But I’ve been saying for the past few months it could be time to start cycling out of some of those big-cap tech stocks because they’re so highly valued relative to their overall profits.
Think about where the growth is going to come from moving forward… rather than where the growth has been coming from.
Look at all of the big names: Facebook Inc. (Nasdaq: FB), Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL), Netflix Inc. (Nasdaq: NFLX), Google parent Alphabet Inc. (Nasdaq: GOOG), Microsoft Corp. (Nasdaq: MSFT) and Tesla Inc. (Nasdaq: TSLA)…
Those stocks make up more than 15% of the S&P 500 and far more than that in the Nasdaq 100. And when these heavyweights see even a little bit of selling, it drives everything down.
And that produces major stock market volatility.
There’s a chance that we’re at the back end of the pandemic if a vaccine is coming soon. And if that’s the case, it could mean a lot of stocks that haven’t done well during the recovery could soon see a boost.
Check out my short video below about keeping stock market volatility in perspective. I’ll go into further detail on what to expect heading into the winter, when many experts warn things could get worse with the pandemic, which would spur more volatility.
I also share some thoughts on the vaccine development front… what could happen after the presidential election… and what a split congress would mean for stocks moving forward.
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