Predicated on fear of a global slowdown and the uncertainty around coronavirus, the stock has experienced extreme volatility as it heads into bear territory. While it may be expected for even the bluest of blue-chip stocks to experience volatility, investors should pay particular attention to their entire investment portfolios as it is in violate market climates that broker misconduct may reveal itself, especially as it relates to your investment objectives and suitability.
When the market suddenly drops, investment portfolios will reflect not only the fluctuations, but also the risks inherent inparticular strategies and investments. All securities carry risk, but some investment products have more than others. Risk tolerance refers to the level of uncertainty in investment performance that is acceptable to the investor. An investor’s risk tolerance is reflective of their financial situation, needs, age, objectives, time requirements, and other considerations. Generally, investors can be categorized within varying levels of conservative, moderate, or aggressive. The types of investments in an investor’s portfolio should reflect their risk tolerance. The changes that investors noticed in their portfolio during market shifts could be indicative of where their portfolio falls on this spectrum.
Investors with the lower risk tolerances should have a conservative investment strategy in place that shields their portfolio from significant declines in market downturns. The goal of conservative investors is to prioritize principal protection and liquidity over risky appreciation. A conservative investment portfolio will be mainly comprised of safer, low-risk fixed-income investments, such as bonds and certificates of deposits. While low-risk investments do not generate the highest returns, the chances of losing principal are much lower. Older individuals closer to retirement should have investment profiles that reflect a more conservative investment portfolio. It is a huge red flag for any conservative investors to have noticed a complete decline in their portfolio from the market downturn.