Elevated market volatility this 12 months has principally prompted monetary consultants to repeat one piece of recommendation: Keep the course.

However as markets are poised for a continued bumpy experience, traders could be clever to maintain one other tip in thoughts: Diversify.

“Diversification works once you want it essentially the most,” mentioned Chris Hyzy, chief funding officer for Financial institution of America International Wealth & Funding Administration.

That comes because the Dow Jones Industrial Common sank greater than 500 factors on Tuesday, successfully erasing beneficial properties for the 12 months. The S&P 500, in the meantime, fell 1.eight p.c.

“Proper now, we’re in somewhat little bit of a hornet’s nest, the place there is a confluence of occasions which might be inflicting some promoting and repositioning to happen,” Hyzy mentioned.

To ensure that traders on the sidelines to really feel comfy sufficient to ramp up their danger publicity, two issues must occur, in line with Hyzy.

“What we’d like is the Fed to return out and be extra balanced of their evaluation, not solely of the economic system, but additionally their potential motion concerning short-term rates of interest,” Hyzy mentioned. “And second, we’d like a decision between the U.S. and China on a commerce settlement.”

Sturdy company earnings within the fourth quarter and first quarter may also assist the markets set up extra stable footing, he mentioned.

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