While minor periods of volatility are a normal aspect of the investment world, the markets have recently faced numerous significant shocks. These disruptions have compelled investors to be more proactive in adjusting their strategies and portfolios.
Sky-high inflation, aggressive central bank actions, and the aftermath of the Covid-19 pandemic have all significantly contributed to these market shocks.
Moreover, the stability of the international system has been disrupted by various geopolitical conflicts, particularly the wars in Eastern Europe and the Middle East.
These political and economic challenges have created an increasingly difficult investment landscape to navigate. However, this trend has somewhat reversed in recent months.
The S&P 500 has gained 11 percent since the start of the year as central banks have paused their rate hikes, and the UK stock market reached a record high of 8445.80 on May 15.
However, any optimism investors may feel should be tempered by the ongoing challenges.
We are far from out of the woods regarding market volatility, so investors must ensure their portfolios are prepared to withstand potential difficulties arising from the geopolitical and economic climate in the coming months.
Therefore, diversification remains crucial, but more on this later.
