How To Use Market Volatility to Your Advantage

As an investor, historical context can help guide decisions, especially when it comes to periods of wide market fluctuations. In this clip from “Ask Us Anything” on Motley Fool Live, recorded on April 22, contributor Jon Quast discusses how market pullbacks can actually open up investment opportunities.

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Jon Quast: I would say that one of the things that was hammered into me early on in my journey was the fact that the market does pull back one year out of three on average, and that those pullbacks of 10%, 15%, 20% are regular occurrences and they are opportunities. Not to be scared to invest during those periods, to actually use volatility to your advantage as a long-term investor.

It’s not really cherry-picked, these are the three stocks that I bought during the 2018 pullback. I don’t know if that’s the exact right date that I’ve put here in y-charts, but this is Micron Technology (NASDAQ: MU), MKS Instruments (NASDAQ: MKSI), and Trex (NYSE: TREX), Not necessarily all market beaters right now but good returns that I picked up at that time of general market volatility.

I think that early on, I would’ve been scared to invest when the market was going down, down, down. But having that drilled into me that this is actually a normal occurrence in the stock market gave me a little bit of bravery, a little bit of courage to go ahead and buy some stocks that I was looking at at that time.

Jon Quast has positions in MKS Instruments and Trex. The Motley Fool has positions in and recommends Trex. The Motley Fool has a disclosure policy.

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