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Is now a good time to buy stocks?

That’s a question that comes up frequently in investing and given the news headlines over the past few weeks, it is understandable to be asking that question. As the coronavirus headlines have taken a backseat to the Russia-Ukraine Crisis, the markets have seen heightened volatility as investors are digesting what all this means. While the situation overseas is deeply concerning, the associated market volatility can be a good thing.

First and foremost, volatility in the markets is a good thing and a sign of a healthy market. A market that only goes up may not be functioning properly and can lead to a bubble. Volatility allows the market to cool off and removes excesses before the excess gets too big. Bubbles don’t generally deflate, they pop.

The next thing to consider with volatility is it allows assets to go on sale. There is nothing better than going to a store to buy an item you want or need and finding out its going to cost you less than you expected. Volatility works like that in the markets. If the market drops, investors have an opportunity to own something for less than what they may have paid the day before.

Finally, the last thing to remember with volatility is that it will always be present. Looking back over the past twenty years there has always been a reason to not buy stocks. In the early 2000s there was the tech bubble and the war on terror. Following that was the Great Financial Crisis from 2007-2009. From 2010 through last year investors have dealt with Greek bailouts, the Taper Tantrum, an Ebola epidemic, Brexit, the trade wars, impeachment proceedings, and coronavirus.  Given so many headlines it would be easy to assume that the markets didn’t do well, except that they did. From 2000-2021, the S&P 500 was positive seventeen times out of those twenty-two years, but it wasn’t a straight shot. There was volatility then, and there will be volatility in the future.

Investing in the stock market brings many opportunities, but very few guarantees. One of the only things guaranteed when investing is that eventually an investor will experience some sort of market volatility. The reasons for the volatility will vary, but the volatility will remain. For long term investors, volatility is not to be feared, but welcomed. When volatility arises the best thing to do is turn the TV off and check with your advisor if your plan is able to take advantage of the sale.