Tags: Paulsen | stocks | volatility | risk

Wells’ Paulsen: Stocks Still Make Sense Despite Volatility

By    |   Wednesday, 21 Dec 2011 08:18 AM

The extreme volatility of stocks this year has spooked many investors away from the market. But Jim Paulsen, chief investment strategist for Wells Capital Management, says now isn’t the time to abandon equities.

Looking back over the last 100 years, daily stock price volatility stands at almost the highest level since the 1930s, he tells Yahoo.

“Therefore traders that care about day to day marks are facing the highest risk they've ever seen," Paulsen says. "[But] volatility over longer periods of time is no different in recent years than it's been throughout the post-war era."
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A lot of individual investors look at the violent moves and think they need to reduce their stock exposure to avoid risk, he says.

“But if you have a longer view, as most investors do, and you realize that volatility hasn’t really risen [long-term,] then maybe investors should think about how much they should really reduce their exposure to risk assets if risk really hasn’t risen.”

Bottom line: “I think you ought to stay long the market regardless of what volatility is doing in the short run,” Paulsen says.

Almost all experts agree that in the long term stocks will rise. But stocks could remain flat or drop for several more years.

So when to get in and buy? One rule of thumb is to buy stocks whenever the market dips, say 5 percent. And then every time it drops another 5 percent, buy more.



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The extreme volatility of stocks this year has spooked many investors away from the market. But Jim Paulsen, chief investment strategist for Wells Capital Management, says now isn t the time to abandon equities. Looking back over the last 100 years, daily stock price...
Paulsen,stocks,volatility,risk
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2011-18-21
Wednesday, 21 Dec 2011 08:18 AM
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