Don't Be Surprised if Your Brokerage Account Balance Moves a Lot Today. Here's Why

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  • Inflation rose 0.4% from January to February but fell on an annual basis.
  • The market is currently higher after a month-over-month increase in inflation, but that could change.

Your balance might bounce around more than usual.

If you've been investing in stocks for long enough, you're no doubt aware that the market can be extremely volatile. Often, all it takes is a single piece of economic news for stock values to make a big move. And heck, sometimes, even positive economic news can lead stocks to plummet. In recent months, for example, we've seen stock values plunge on the heels of positive jobs data, because strong job numbers are an indication that the problem of inflation is likely to persist.

And speaking of inflation, well, it's hardly a secret that it's been hurting consumers for well over a year now. And since the latter part of 2021, many people have had no choice but to rack up debt on their credit cards and raid their savings to cope with higher living costs.

Meanwhile, the Bureau of Labor Statistics just released its February Consumer Price Index (CPI) reading. That index measures changes in the cost of common goods, from groceries to car prices.

The good news is that on an annual basis, inflation fell from 6.4% in January to 6% in February. But on a monthly basis, inflation rose 0.4% in February. And that news might be enough to cause extra volatility in stock prices, especially today and this week.

If that happens, though, there's no need to panic. Really.

Don't let stock market volatility shake you

This week has already been a rocky one for stock investors in the wake of Silicon Valley Bank's collapse late last week. While stock prices are higher today so far, the inflation report could weigh on stock values throughout the rest of the week. We’re already off the intra-day highs.

For one thing, some investors might get spooked over the 0.4% monthly uptick in inflation shown for February. And while a drop from an annual inflation rate of 6.4% to 6% is positive movement, 6% is still a glaringly high level for inflation to be sitting at.

In fact, February's CPI numbers are likely to drive the Fed to continue with its interest rate hikes. And that alone could lead to lower stock values.

But if your brokerage account balance moves more than normal today, try to remember that it’s only temporary. The stock market tends to be very reactive to news in the short-term, but for most investors, it’s the long-term that matters.

Look at the big picture

Any time you invest money, it's best to do so on a long-term basis. That allows you to ride out periods of market turbulence and, ideally, ultimately come out ahead.

While we're in the midst of a shaky week for the market, it's fair to say that 2023 might be a tricky year for investors in general. There's still the problem of raging inflation and the uncertainty of a possible recession to grapple with.

But if you take a long-term approach to investing, the events of 2023 may not matter all that much in the grand scheme of things. In fact, if you have no plans to liquidate your stock portfolio for another decade or more, then you may not even want to bother checking your brokerage account balance all that frequently.

Sure, you can check in once a quarter, namely just to make sure your portfolio is as balanced as you think it is. But don't sweat day-to-day movement in your brokerage account.

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