1376 - With So Much Uncertainty in the Markets, Here’s How Smart Investors Protect Their Investments by Paul Moore
Jul 21, 2024
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Financial expert Paul Moore discusses strategies for protecting investments in volatile markets, citing examples like the Suez Canal incident and COVID-19. He emphasizes diversification, due diligence, and applying Warren Buffett's approach to real estate for long-term gain.
Market volatility can be managed through diversification, due diligence, and long-term investing.
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Deep dives
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Key Strategies for Managing Volatility in Investments
To navigate market volatility, investors can adopt three key strategies: broad diversification, rigorous due diligence, and long-term investment approach. Following Warren Buffett's example, diversifying across asset types, geographies, operators, and strategies can mitigate risks. Emphasizing thorough due diligence based on clear criteria and maintaining a long holding period helps in making informed investment decisions and avoiding detrimental consequences of market fluctuations.
Remember the container ship that got wedged in the Suez Canal in March 2021? Within days, hundreds of ships halted. In less than a week, 12% of global trade halted.
This is merely one simple example of volatility. A tiny event in some remote corner of the world made life perilous and unpredictable for a billion people. The shockwave reverberated across the Earth.
There are many more examples like this. COVID-19 spawns in Wuhan, China, and creates a once-in-a-100-year worldwide pandemic. Or more theoretically, one butterfly flapping its wings spawns a hurricane on the opposite side of the globe.