In recent years, the argument could be made that, due to a multitude of unforeseen global events, the financial markets have been more volatile than usual. Indeed, with the COVID-19 pandemic, the supply chain issues, the ongoing Russian-Ukrainian War, and countless others, it would be even more impressive if the market were not phased at all. Unfortunately, that is not the case, and the market reflects that. So, with that said, what does one call a highly volatile market? In this week's submission, we will be taking a look into what Yo-Yo markets are. So, without further ado: Y stands for Yo-Yo Markets.
What Is Yo-Yo Market?
Not to be confused with the market for yo-yos, which is its own thing, a yo-yo market is a financial term used to describe particularly volatile markets. Yo-yo markets are an amalgamation of both up and down markets rather than having recognizable features of one or the other. Per its namesake, the upwards and downwards trajectories of a yo-yo render it a slang term for an equally volatile upwards and downwards market. Share prices frequently experience dramatic rises and falls that can happen quickly—within a few weeks, days, or even hours. The changes are frequently sudden, and the bulk of the stocks typically move at the same time.
A yo-yo market typically makes it exceedingly challenging to be an investor since prices are constantly rising and falling, swinging from very high price points to very low price points. Indeed, these volatile conditions are far from ideal when it comes to making a profit out of one’s investments. That being said, a select few investors who thrive on the additional risk added from volatility may reap profits out of swing trading.
That’s all for this week! Thank you for reading, and see you in the next (and last) one!