Jan 29, 2021
You Can Stay the Course Through Volatile Markets
Short-term volatility will always exist when it comes to investing.
You might be watching the volatility in the market and wondering what’s going on. We’ve been working in and around Wall Street for decades, and this last week has been unprecedented. Something the investing world has never seen before is taking place related to a small number of stocks—but despite all the turbulence, our fundamental principles at Stash remain unchanged. We’re not a day-trading app, and never will be.
We built Stash with a single-minded mission—to make investing easy, affordable and accessible for everyday Americans. We believe in the tried and tested principle of regular, long term, and diversified investing as the key to building wealth.
Stash is not a day-trading app
We do not advocate day-trading and have never promoted it to our customers. On the contrary, we provide a range of educational guides and tools, such as Auto-Stash and Diversification Analysis, to help customers invest in a regular, automated and affordable manner, and help build healthy, balanced portfolios for the long term.
Although we believe everyone should have access to investing, we caution against stock speculating and trying to time the market, which is why we have always operated with only four trading windows throughout the day. Over the past few days, there has been extraordinary trading activity in the shares of a few companies, resulting in something called a short squeeze. (You can find out more about that in our article here.)
Short-term volatility will always exist when it comes to investing. We encourage you to focus on your long-term goals and position your portfolio to achieve them. Invest regularly throughout moments of volatility towards your goals, and don’t attempt to time the market.
We care about our customers, and their long-term success, which is why we’ve embedded education and guidance into every corner of the Stash app, helping our customers ride out these market swings throughout their investing journey.
Learn to diversify
The biggest lesson that we can take from this week’s events is the importance of portfolio diversification. Don’t put all your eggs into one basket, especially with stocks that swing significantly. As a fiduciary1, Stash is required to act in your best interest, which is one of the reasons why we created our diversification analysis tool to help you reduce risk.
Finally, you might be wondering if the trading behavior we’ve seen this week might extend to other stocks. No one knows for sure, but it could continue with other stocks that have been widely talked about on message boards and trading forums.
When a high degree of trading volatility exists for any stock, our advice is to proceed with extreme caution. Attempting to speculate with these stocks—or any stock—is a super high-risk activity that could end up being a price bubble, and people could be left without a seat when the music stops.
We’ll say it one final time, at Stash we preach buy and hold, investing for the long term, and diversification.
Keep calm and Stash on.
Co-Founders Brandon & Ed