The stock market has given investors a bad case of whiplash over the past few months. In December, the Standard & Poor’s 500-stock index tumbled 9%. Since then, however, the benchmark has reversed course and climbed 11%.
When the market makes violent swings, the worst thing you can do is to try to stay in sync with it by selling when stocks fall and purchasing when they rebound. But if you own a fistful of volatile funds – even excellent ones – a market like today’s can sucker you into making the wrong trades.
The solution? If you’ve made a bad trade or two, or simply are losing sleep over the potential for another bout of market rockiness, consider replacing one or two of your most volatile funds – no matter how good they are – for more placid vehicles.
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