Don't panic! What experts say to do in a volatile market

To put it bluntly, the stock market has seen better days. But what's happening, and why? Should everyone be panicking? Here's everything you need to know.

What is the market doing?

Things are incredibly volatile right now.

"Even great companies are going to be suffering with the market," said Greg Swenson, founding partner of a London-based investment bank.

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The market has been in a funk for months, "starting with high-growth unprofitable tech stocks late last year and spreading to even companies with healthy cash flows stocks in recent weeks," CNBC adds. And the decline has eliminated much of the "rapid gains stocks enjoyed off their pandemic lows in March 2020." In short, there hasn't been much good news as of late, and markets are consequently "bouncy and on edge," Vox explains.

Why are investors so squeamish?

A few different reasons.

For one thing, the Federal Reserve's recent interest rate hike has investors worried that a recession is on its way. As The New York Times put it, markets have become so used to the "loose monetary policy of the past two decades" that they don't know how to react to such a monumental change.

And that's without mentioning the COVID-19 lockdowns in China, rampant levels of inflation, surging oil prices, and ongoing supply chain issues, the Times notes.

The Fed has been hopeful it can bring down inflation without pushing the U.S. into an economic downturn — a difficult maneuver referred to as a "soft landing," per the Journal. But investors are growing skeptical that the central bank can pull it off. Newly-reconfirmed Fed Chair Jerome Powell has even appeared a bit unsure himself, having admitted Thursday that "the process of getting inflation down to 2 percent will also include some pain," per the Journal.

Are certain companies being hurt more than others?

Tech companies have felt the burn especially hard, Vox notes, citing embattled fitness company Peloton as an example. Trading platform Robinhood also recently announced layoffs, and, in April, streaming giant Netflix's reports of dwindling subscribers for the first time in a decade sent its share price plummeting. Meta, Amazon, and Alphabet have been struggling as of late, too.

Cryptocurrencies have also been having a difficult time. Last Monday, Bitcoin hit its lowest level since July 2021, per the Times. Luna, meanwhile, took a dramatic plunge at the end of last week, "trading at half a penny, down from more than $60" on May 9, the Journal wrote Friday. Some strategists are projecting prices to fall until they reach pre-pandemic levels.

Should I be worried?

It's scary, sure, but it's not the end of the world; the stock market has always gone back up.

"While we are seeing this broad-based sell-off in the market, and it does seem like you cannot avoid it, this isn't exactly a time for panic," Kristin Myers, editor-in-chief of finance website Balance, told Vox.

Though "unsettling," market volatility is "historically not unusual," added financial services company Charles Schwab. If long-term investors have aptly diversified and personalized their portfolios, "it's likely the recent market drop will be a mere blip in [their] long-term investing plan."

"I think investors need to remind themselves that market declines are pretty common," said Sam Stovall, chief investment strategist at CFRA Research, per Vox.

With the Fed continuing to push up interest rates (two more half-point hikes are expected in June and July), these ups and downs are likely to continue for the foreseeable future, Schwab estimates.

So, what can I do?

For the brave young investor, right now could actually be a decent time to buy, especially if stocks or assets on your wishlist are trading lower than they were in the past, Vox writes, per Balance's Myers. "Think of this as everything is on sale," she added.

You might also treat the current plunge as a nudge to check in on your 401K more often (though maybe hold off on that for the time being). Myers suggests taking a peek once a quarter, "just to see what's going on and reevaluate," summarizes Vox.

Further, "don't try to time the markets," Schwab recommends. A plunge can be nerve wracking, but it's often better for your portfolio to just stay the course.