Staying the Course During Stock Market Volatility

volatilityOur stock market has become increasingly volatile. One day we’re up, the next we’re down. China’s stock market has been thrown into crisis, while Japan’s just climbed 7.7 percent. Couple that with all the conflicting opinions surrounding what the Federal Reserve is going to do about interest rates, and investors are starting to get—understandably—a little nervous. How are we to react to this growing frequency of volatility?

Investors big and small are faced with two obvious risks at the moment: a market-induced slowdown of the global economy and the prospect of an upcoming interest rate hike by the Fed. It makes sense why some would rather walk away entirely than face potential undesirable outcomes, but that’s not necessarily the best strategy. In times of instability and uncertainty, one thing can be for sure: there is also opportunity.

New areas of value are emerging, as well as assets that are surprisingly well-positioned for the our current market climate. Here’s a look at some market segments you might want to take another look at:

1. The European market.
European stocks are currently priced well, the eurozone economy is improving, and unemployment recently fell to the lowest it has been in three years. Plus, experts and media alike are speculating that there might be an extension of Europe’s current quantitative easing program. All of this makes the European market pretty attractive right now.

2. Large-cap stocks.
While the recent market downturn has hit some large-cap companies hard, it’s also created a great time to buy, with reasonable expectations for growth in the future. While we’re still in the middle of a market downturn, recent data suggests we could be looking at a decent close to the year.

3. High-yield stocks.
High-yield has actually stabilized over the past week, and history has shown that rising interest rates don’t affect these stocks as much as you might think. Plus, there has been a steady trend of investors buying market pullbacks.

4. Tax-exempt bonds.
Blame it on the market, but tax-exempt bonds are currently offering promising yields compared to taxable investments of the same maturity.

While there are places for opportunity in almost every situation, obviously you should observe a certain level of caution based on your particular risk tolerance. I can guarantee that there will be more bumps in the road due to the current instability in the global market, and it’s important to be cautious, yet strategic, when reacting.

Lower Benefits, Lower Unemployment Rate

average-monthly-job-growthDuring the depression of 2008 the state of California approved funding to those who were faced with hard times and help them get through a few rough years until they bounced back on their feet. After three years of helping out the community, Democrats believed it was time to start decreasing unemployment benefits since many of the unemployed were citizens from the 2008 crash.

According to the National Desert News, “The average period of unemployment benefit coverage dropped from 53 weeks of coverage to 25 weeks after the federal benefits program was cut.” By cutting the benefit coverage in half, the hopes were the people collecting unemployment would be enticed to look for employment. When this was implemented in 2011 the number of unemployed drastically fell, and number of jobs by Californian residents grew.

Since unemployment rates vary from state to state, California was able to make this change even though it did not sit well with the residents collecting unemployment since the average around the nation was just around 37 weeks of coverage. The democrats did not propose the change of benefits to strong arm their residents or make their lives that much more difficult, but to pick up and strengthen the economy of California. The more jobs that would be created, the better the economy would be from facing another disaster similar to the one faced in 2008.

Even though people may be upset about the drop in benefits, they cannot argue with the results. “Average employment growth was about 25 percent higher in 2014 than in the best of several preceding years.” Employment rates are rising and states taking this approach nationwide can see similar results. In 2014 alone, 1.8 million new jobs were created.

For more information about Araceli, please head over to her official website.