Hello, I’m Gerri Willis and welcome to Rich Is Not A Four Letter Word, the podcast for your wallet. One word to focus on today – volatility. That’s what the stock market has been all about and what traders down on Wall Street are talking about. I spoke to one of them on the floor of the New York Stock Exchange, Stephen Guilfoyle, also known as Sarge, about what to make of the extreme ups and downs plaguing the market now. Here’s what he told me.
Here are the takeaways:
- When the volatility becomes extreme – take a breath and step back. The truth is, this volatility is making traders with lots of experience nervous. The market these days moves more quickly and in larger waves than ever before largely because of computerized trading and algorithmic trading. Also, we are at higher levels in the market – so a 100 point swing isn’t as big a deal as it used to be.
- Algorithmic trading is not your friend. Guilfoyle says that this type of trading, automated and pre-programmed, aims to make money by anticipating what small investors will do.
- If the large moves both up and down have you unnerved, he suggests looking at dividend paying stocks because even if your stock plummets, you’ll still get a quarterly payment, a distribution that can make the pain of a lower stock price a little less hurtful.
- Guilfoyle says don’t bet against tech yet. He says that sectors like semiconductors and cloud computing will continue to grow.
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