August is finally over. Market volatility has certainly calmed down but investors are prepared to pull the trigger at the first sign of trouble. The U.S. economy is being impacted from global fear, particularly China, as other nations are struggling to stay afloat. Fortunately for us, the U.S. continues to show signs of prosperity from consumers, who make up two-thirds of GDP.
Top traders are coming back to the desk this week from their shortened summer holidays. Last week was a wake up call that markets can whipsaw quickly either way with nobody in control. To better prepare for volatile swings, you can hedge your portfolios with ETFs like Proshares Short S&P 500 (SH) or hold onto more cash.
The biggest suspense for September will be whether Federal Reserve will increase interest rates. If a positive labor report is released on Friday, September 4th then we will have more of a reason for interest rates to increase this month. Expect this to be the most volatile event for the month unless another extraordinary event takes place. Investor portfolios should have stabilized from the massive selling last week and nearing the market return.
If your portfolio returns are drastically different from the market then speak with your financial advisor on why your results have differed. Unless you have a significant position in energy-related stocks, retail investors should be able to match the average market return but should tread cautiously for the rest of the year.
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