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  • Writer's pictureRealFacts Editorial Team

How to Protect Your Portfolio Against Volatility in an Uncertain Market

Updated: 3 days ago

Stock graphs on a phone

Although the stock market has been remarkably strong to start the year, there is still a large amount of looming uncertainty present. Uncertainty leads to volatility which can be tough for investors to navigate. One of the main causes of uncertainty at the moment is the Fed’s rate cut timeline, coming into the year several rate cuts were expected to happen over the summer and it now looks as if a rate cut may not even happen this year at all. In addition to this, 2024 is an election year, election years tend to be more volatile than non-election years, especially ones with a race as close as this one.


So, how can you protect your portfolio against an unpredictable and volatile market? Ian Salisbury of Barron’s reported on the following strategies given by some of the largest investment banks in the nation. “One classic strategy, which Bank of America currently recommends, is buying dividend stocks. Companies that pay regular dividends tend to soften the market’s biggest price swings in part because a chunk of their returns are tied to yield, and in part because companies that pay dividends tend to have healthy cash flows, making them less speculative. Another route, this one highlighted by Morgan Stanley, is commodities. These represent a natural hedge against inflation, making up a significant chunk of the consumer price index. While individual commodities can be highly volatile, they tend to rise and fall at different times than stocks and bonds, meaning they can still help smooth returns for your overall portfolio.”


These banks recommend that if you’re going to keep your capital active in equities, move money towards stocks that pay a solid dividend, this will help you ride out the emotional draws of volatile moves and swings. They also recommend making moves outside of the equities market, as precious metals and other commodities look solid at the moment as alternative investments to traditional equities.


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