Determining your risk tolerance in a volatile market

When you can't sleep at night, you've extended your tolerance for risk

People watch trading boards at a private stock market gallery in Kuala Lumpur, Malaysia on Monday, Aug. 24, 2015. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector. (AP Photo/Joshua Paul)

CHICOPEE, Mass. (WWLP) –    The world investment community is holding its collective breath to see what the markets will do Tuesday, after Monday’s big selloff.  Stocks suffered heavy losses, extending the drop that started last week.

The Dow Jones Industrial Average ended Monday’s trading session 3.6% lower, posting a loss of 588.5, after briefly plunging almost 1,100 points just after the open. Trading was very volatile.

Raymond James Senior Investments VP Mark Teed told 22News he has a simple formula to see of you’ve taken on too much risk in your portfolio.

“When you can’t sleep at night. You’ve exceeded your tolerance for risk,” said Teed.  “When you’re too comfortable and you don’t even think about it or worry about it…so there’s a conflict between not sleeping at night and being too complacent.  That’s where you should be.”

Teed urges young people with a long-term investment horizon to view this market drop as a “buying opportunity” for quality stocks that may be selling at a discount.

Teed told 22News he’s hoping for a “Turnaround Tuesday” rally that would recoup most of the losses of the last several losing trading sessions.

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