Nowadays, stock program trading and international markets have made price volatility more prevalent than ever. While the conventional view was that the risk of stock trading goes down over time, a recent joint study between the University of Chicago and the University of Pennsylvania shows that the opposite is true.
Their research shows that investors who are not sure of their own investments should stay away from the stock market. The recent 2008 financial crisis only served to illustrate this point. The CBOE volatility index, a measuring stick for short-term erratic price changes, hit record numbers in the last two decades, with five of those spikes recorded in the last ten years.
Investment planners recommend a smaller risk for stock traders, preferring a trusted mutual fund or diversified portfolio, no matter how small the estimated returns.
Other portfolio managers recommend learning to see the ebbs and flows of the stock market until one becomes fluent in the way the market works. Although it will take some time and dedication, being able to see the early warnings of a downward market will save investors more returns in the near future.
Investment managers also suggest looking to the Internet for inspiration. With the advent of online stock watchers, investors can rest assured knowing how their portfolio moves with the market without having to consult their brokers separately.