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Why the FinPipe are markets so volatile?

Why are financial markets so volatile? Just like airplane turbulence, the markets will always go up and down. Watch the video above to learn more.

“Folks, we’re entering a zone of heavy turbulence, please return to your seats while the seatbelt sign is on.”

And just like that what you thought would be a pleasant flight has turned into a stressful nightmare.

Then, as you feel like you’re a step away from full-out panic, the turbulence is over. The plane steadies itself. Was it the pilot? The aircraft? The weather? Wake turbulence from another aircraft?

You’re unsure what happened, but you’re just glad it’s over. You’re through the rough patch.

Now, you’re three blissful chapters into your book.

Suddenly, the seatbelt light flashes again. Everything shakes.

What the FinPipe is wrong with your flight?

Although it may not feel like it, the answer is nothing.

Airplanes experience air turbulence, just like ships rock through ocean waves. Some feel stronger/scarier than others, but it’s just par for the course to experience some bumps along the way. Sometimes the turbulence is severe and it takes skilled, experienced and disciplined pilots and flight attendants to get you safely to your destination.

The same is true for markets. They go up and down every day. The highs and lows – the turbulence – can be terrifying if you are not used to it.

To show you visually what happens, in the video above we have taken the last 25 years of the Nasdaq Stock Index in percentage terms and converted it into altitude to give you an idea of what an aircraft would have gone through in altitude changes following the stock market pattern.

No one likes seeing a 20 per cent drop but with the right crew, you can get through it safely.

Your investment advisor is your pilot. It doesn’t matter how much you have, losing 20 percent of your hard-earned savings is a terrible feeling whether you’re starting with $1,000 or $1 million.

Retail investors are famous for buying at market tops for fear of missing out and selling out at the bottom in abject terror. Will a Robo-Investor help them? Think about your flight. An automated “Robo-Pilot” comes on and says in a tiny electronic voice: “This is your automated flight system speaking. There is turbulence.” You probably want a human in charge at that point.

Just like the flight crew, a good advisor can explain what’s happening, what the emergency procedures are, and why you should keep calm. Markets rise and fall. It’s just what they do.

With a good advisor and a diversified portfolio, you can chart the right course to get you through any ups and downs.