Please ensure Javascript is enabled for purposes of website accessibility

I'm Making These 2 Moves Due to Recent Stock Market Volatility

By Maurie Backman – Sep 24, 2021 at 6:46AM

Key Points

  • It's been a wild week for the stock market.
  • Here's what one investor is doing with her portfolio in light of it.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's my approach to the latest bout of turbulence.

September has historically been a volatile month for stocks, and this year was no exception. Earlier this week, the stock market experienced its worst slide in months. While things have settled down since then, many investors are feeling pretty shaken up right about now.

Since my investment portfolio is loaded with stocks, the events of the past week have prompted me to take action. Here are two key moves I'm making.

Business person typing on laptop.

Image source: Getty Images.

1. Assessing my investment mix

Sometimes, what starts out as a broad mix of stocks can shift as some companies see their share prices increase. Or to put it another way, you might start out with a portfolio that's 25% invested in tech stocks, but if they rise in price, you might, a year later, end up with a portfolio that's 50% invested in tech stocks. This would lead to an investment mix that's less balanced than you'd like it to be.

It's for this reason that I'm taking a closer look at my personal investment mix and making sure I'm still diversified. I may decide to move investments around if I find that I'm too heavily invested in one particular sector.

2. Setting money aside to buy more stocks

While the recent stock market sell-off may have been short-lived, stock values could easily fall again between now and the end of the year. And I want to be ready if that happens.

Many people look at stock market downturns as a bad thing. I see them as an opportunity to load up on quality stocks while they're cheaper to acquire.

I have a few stocks on my watch list with share prices currently a little too high for my liking. I expect those share prices to come down if the market tanks on a whole, even if temporarily. The more cash I stockpile in anticipation of a buying opportunity, the better-positioned I'll be to capitalize on any potential turbulence when that time comes.

The one move I'm not making

While I may be examining my holdings closely and making plans to sock away extra cash in light of the events of the past week, one thing I won't be doing is selling off stocks in a panic. As someone who's been investing for many years, I know all too well that you don't lose money during a stock market downturn unless you actually liquidate investments, thereby locking in losses.

This doesn't mean that I won't sell a stock or two if I find that I'm too heavily invested in a specific market segment. But that's a calculated decision. It's not the same thing as selling stocks due to fear.

We don't know what the next few months have in store for the stock market. Things could stabilize or volatility could ensue. Investors who approach the final quarter of the year with diversified portfolios and cash on hand may have an easier time sleeping at night and taking advantage of buying opportunities as they arise.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
351%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.