Mutual funds for every objective
Mutual funds come in a wide variety of styles to meet the varying needs of investors.
Mutual funds come in a wide variety of styles to meet the varying needs of investors.
04/23/2024
MARKET VOLATILITY
Market volatility happens for many reasons including economic influences, geopolitical events and corporate reports.
Investors may be able to navigate volatile markets with long-term investing and diversification.
Investing markets are influenced by many factors, creating what’s called market volatility. From corporate earnings reports to global political instability to global pandemics and economic influencers like inflation and interest rates, there are many factors that can result in the prices of financial assets, such as stocks and bonds, going up or down.
As you can see from the chart, measurements of volatility are frequently reflected in performance in the S&P 500, which then affects the investments in your portfolio. The chart below better highlights market performance by calendar year, with a clear comparison of the number of positive versus negative years.
Periods of increased market volatility will happen, and when they do, there’s a strong probability it will affect your investments. Two ways to navigate volatile markets include:
Adopting a long-term investing approach. As both charts demonstrate, even through the largest volatile swings of the last two decades, the S&P 500 Index maintained long-term growth—and maintained positive growth roughly 75% of the years since 1922. Long-term investors take the approach of riding out market swings in anticipation that their investments will recover from any dips with the next upswing.
Diversification. Not all types of investments are affected at the same time by the same amount when volatility influences markets. For example, investments in the energy sector performed well in 2022 but struggled in 2023. Other the other hand, investments in the information technology sector had low performance in 2022, but thanks in part to artificial intelligence, performed well in 2023.
It’s important for investors to understand what kind of volatility is impacting markets like the S&P 500 Index. If you need assistance in evaluating your investment portfolio and how volatility may impact your investments, contact your Thrivent financial professional. Once you’ve evaluated your investment portfolio, start your investment journey with these three steps.
The concepts presented are intended for educational purposes only. This information should not be considered investment advice or a recommendation of any particular security, strategy, or product.
Thrivent financial professionals are registered representatives of Thrivent Investment Management Inc. Thrivent Investment Management Inc. is an SEC-registered investment adviser and broker/dealer, and a member of FINRA and a subsidiary of Thrivent, the marketing name for Thrivent Financial for Lutherans.