Uncertainty is a major worry for investors today. The stock market finished off 2017 on a huge high, with better values than have been seen in recent years. 2018 also started strong, with one of the best openings in recent history.
Now that we’re almost to the end of February of 2018, the biggest story in the stock market is volatility. Huge drops from earlier this month have tapered off, but we still see the market only gaining or losing a little each day.
Has the stock market peaked? Although some analysts expect it to rebound and grow by up to 10% by the end of the year, there is a large group of investors who think that it peaked at the end of 2017. In fact, almost 45% of hedge fund investors think that the stock market will go nowhere but down from this point.
According to a report from data and intelligence company Preqin, investors in hedge funds plan to maintain their allocations, due to a declining interest in stocks. Investor confidence has been low for some time now, which is encouraging a large group of hedge fund investors to stay out of equities.
Hedge fund investments are attractive because they can be managed in ways that limit the damage from volatility in the stock market. Hedge funds are made up of investments in a number of assets, so the risk to investors in the fund is minimal. For anyone that has been concerned of the volatility in the stock market this year, looking into available hedge funds could be a good way to diversify.
In the same report, it was found that almost 40% of investors would be defensive with their existing stocks by keeping stocks with perceived long term value, and selling off others as opportunities arise.
Should Investors Avoid the Stock Market at This Time?
The key question being asked every day, is whether or not it’s a bad time to invest. Buying low is one of the classic strategies for making money on the stock market, so there will be investors who see current volatility as an opportunity.
Potential investors should not necessarily shy away from the market. There are people on both sides of the argument, and not every analyst predicts a gloomy future for equities. New investors should only invest what they can afford to lose, and should aim for strong stocks with high historical recovery rates, such as established tech stocks and market innovators.
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