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How To Win In Choppy Markets

We have witnessed an exciting summer on the investing front. Markets have been oscillating between extremes as the banter has continued regarding a potential default in Greece, the Chinese slowdown situation, among other headlines.

Today alone witnessed a 1,000 point drop in the Dow which is, as it turns out, the largest one-day points decline of all time. The previous record was less than 800 points.

Who cares?

Tune Out The Noise

What hasn’t changed amid all of the uncertainty, however, are the rules of making money in the stock market. The surest path to wealth has been and still is to accumulate high-quality assets at good or even just fair prices and reinvest that cash flow over the course of time.

With a broad enough perspective, the only reason declines like today should interest a serious investor is for the buying opportunity they present. I was actually away from my computer while all of the action was taking place and received notice only from a friend. Alas, while I bought some Bank of Nova Scotia (BNS) stock on Friday when it dipped, I was unable to pick up more today at the bottom when it breached $53 per share.

How To Proceed

All of this begs the question: How should an investor proceed in a market where we seem to be heading lower steadily with massive declines? What if the bottom drops out in China?

The answer for everyone will ultimately depend on their personal situation. For me, however, the answer will be to focus on the reality that many of the businesses around today–the good ones at least–will be doing more business decades from now than they are today. What the stock market happens to do today, tomorrow, or next week, will have virtually no relevance in two decades. What seems so important now will probably earn little more than a footnote in an academic text.

What will still exist today are consumers and emerging middle classes who are hungry for goods and services. Those consumers will require companies selling them all the wonderful things business has to offer. As a prudent, forward-thinking shareholder, my goal today is to get my money to work at reasonable prices so I can enjoy the windfall of cash flow from future consumers.

Capitalism is magnificent, isn’t it?

I know of few other systems where individuals such as myself and you, the reader, can directly and easily take part in the benefits of a growing global economy.

The Bottom Line

Stock markets and any other markets you can think of have and always will rise and fall. This is a natural phenomenon which will be around until the end of humanity. With billions of people each trying to carve a profit out of the system, there will be winners and losers. I believe to win over long periods of time requires a patient mindset.

Accumulate wealth steadily by taking part in stock ownership whilst remembering that stocks represent real underlying businesses. Focus on whether a business can be expected to have a better future decades from now than it does today. If it does, odds are that the stock market fluctuations will iron themselves out. Dividends are the investor’s compensation for dealing with market uncertainty.

Thank you for reading.


How are you participating in the stock market frenzy of the past week?

Pictures courtesy of pixabay.com

2 thoughts on “How To Win In Choppy Markets

  1. Choppy markets, down markets, up markets, you can always find something worthwhile to invest in. The secret is to do it consistently and don’t try to time the market. Dividends are a great perk for holding said assets.

    1. Hi EL,

      You’re right; the markets always have something for the patient, long-term accumulator of assets. Reinvest the divs and sleep well.

      Thanks for stopping in and commenting,
      – Ryan

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