Finding opportunity

Last week my colleague Dwayne shared with readers the importance of financial agility, especially in volatile markets. An investor may wonder if they should change course and if there are truly opportunities out there when market conditions appear to be declining rapidly? While every investor is different, the general answer is yes there are opportunities.

Unfortunately, we cannot predict the future and have no crystal ball to give us a 20/20 vision of what will happen for the remainder of the year. However, an investor can use strategy to navigate these turbulent times and look for opportunities.

The first thing an investor must ensure in times of volatility is to remove emotion from their investing decisions. Remain focused on your financial goals in the short and long term and strategically review and position your portfolio to stay aligned with these goals.

Once you have assessed your portfolio you can determine how to take advantage of the lucrative opportunities presented during these times. Volatility can be used as a gateway to enter the market. There may be a stock you had always wanted to add to your portfolio, in a bear market it may be trading significantly cheaper than before and can now be purchased at a discount. This will allow you to position for long term growth. If you are an investor that practices dollar cost averaging, you can now purchase additional shares of stocks you already own at a cheaper price.

Investors can also consider looking at companies that pay dividends to provide income. Larger corporations that have weathered times of financial uncertainty and have a track record of success are prime choices to add to your portfolio.

Another opportunity that investors may take advantage of is the decrease in price for ETFs and mutual funds. An ETF is a collection of hundreds or thousands of stocks or bonds, managed by experts, in a single fund that trades on major stock exchanges, like the New York Stock Exchange and NASDAQ. If you prefer a passive investing landscape now may be a good time to purchase units in either type of fund, which will set the foundation for capital appreciation in the future. Investing in managed funds will also decrease your exposure to a single company's risk.

For the investor who prefers fixed income products such as bonds, they may also take advantage of the decline in bond prices. To mitigate against risk investors should seek high credit quality bonds that are trading at a discount during times of volatility. Investors can lock in attractive yields at this point. Higher-yielding bonds with shorter maturities are also attractive investment choices.

Always remember your investment goals are your own. You are running your own race, once you have identified opportunities in the market speak with your financial advisor to get sound financial advice. They will help guide you on how best to determine the ideal strategy for you.

Christine Rankine is the Manager -Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm

Feedback: if you wish to have Sterling address your investment questions in upcoming articles, e-mail us at info@sterlingasset.net.jm.