Stock market volatility prevails as the FTSE 100 rises again!
The Motley Fool
Published Jun 16, 2020 10:47
Updated Jun 16, 2020 11:10
Stock market volatility prevails as the FTSE 100 rises again!
Stocks worldwide received a welcome boost this morning by even more US monetary stimulus plans. The level of cash being doled out by governments around the world in response to the coronavirus pandemic is truly mind-blowing. The financial markets would be in much worse shape if not for this support, but the unexpected level of stimulus is causing unprecedented stock market volatility.
While the incentive helps to bolster share prices, rumours of a second coronavirus wave are having the opposite effect. Concern has been mounting in recent days as coronavirus infections spiked again in Beijing. This created fluctuations in the price of oil as the worry of low demand for longer re-emerged. However, the reality may differ from the rumours and the UAE expressed confidence that recent OPEC+ cuts are being met. This was enough to encourage traders and temporarily raised the oil price once again.
When the oil price rises, it provides a welcome boost to the stock market. So today appears to be an upbeat day for the financial markets after a dismal week. But unpredictability is paramount, and everything could head south by the time you have finished reading this article, such is the level of stock market volatility just now!
Stock market volatility With market fluctuations par for the course, novice investors should steer clear of any day-trading ambitions and stick to buying shares in stocks worth holding for the long haul. Long-term value investing is a much better strategy to generate wealth than enduring the increased risk that comes with day-trading. We are in a period of high volatility, uncertainty and the likelihood of a market crash followed by a long recession. This may spell doom and gloom, but it also throws up the perfect opportunity to pick up high-quality stocks at rock-bottom prices.
Value investing wins hands down The world’s economy is in turmoil and many of the highest-regarded companies are struggling. I do not think this will last forever and many of those businesses having a hard time just now, will streamline, bounce back, and thrive in the years to come.
If you have the patience and discipline to put your money to work, you can pick up some fantastic stock market bargains just now.
BP (LON:BP), BAE Systems (LON:BAES) and Diageo (LON:DGE) are three such FTSE 100 stocks that I would buy for a long-term portfolio, along with Rentokil Initial (LON:RTO) and my FTSE 250 favourite Tate & Lyle (LON:TATE).
Get The App
Traditionally, buying stocks that trade below their intrinsic value has been a profitable way of generating lasting wealth. It has certainly proved its worth many times over for billionaire Warren Buffett. With a long-term investing mindset you should welcome stock market volatility as the perfect opportunity to buy cheap shares.
The post Stock market volatility prevails as the FTSE 100 rises again! appeared first on The Motley Fool UK.
Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.