AI News continues to dominate

U.S. stocks were mixed on Monday as AI News continues to control financial headlines.

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U.S. stocks were mixed on Monday as AI News continues to control financial headlines. The large S&P 500 index rose 0.4%, the technology-focused NASDAQ composite rose 0.7%, and the Blue-chip index, the Dow Jones Industrial Average, fell 0.1%.

On Monday, Chipmaker AMD announced a multi-billion dollar partnership with Openai, the company behind ChatGpt. The agreement includes AMD chipping Openai over several years. AMD directly generates hundreds of billions of dollars in annual revenue. More indirectly if other buyers choose AMD as their alternative supplier to NVIDIA. This arrangement also gives Openai the option to buy around 10% of AMD.

Inventory futures for the S&P 500, Nasdaq 100 and Dow Jones remained pretty flat as the market was open on Monday.

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View investment and economic news

Federal Reserve Board member Stephen Milan will speak on Tuesday at the Managed Funds Association Policy Outlook 2025. Milan was appointed to the Fed's policymaking committee just before the interest rate meeting in September. He opposed the quarterpoint rate cut and instead argued for a bigger cut.

Milan has since been criticized for overstated the impact immigration has on inflation. The immigration impact was a key point in his argument.

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Today's trading lesson

What does volatility mean to you? Volatility means all or little depending on your investment strategy, risk tolerance, and investment timeline.

Volatility is defined

Volatility refers to how quickly an asset changes its value. If stock prices move significantly up and down in a short period of time, they are extremely unstable. Stocks that do not experience dramatic price changes will be less volatile.

Volatility measurement

Beta is a popular and understandable metric for measuring volatility. The baseline, market-level beta value is 1. If the stock is above 1 beta, it will be more volatile than the market. If the inventory is less than 1 beta, the inventory is less volatile than the market. In this case, “market” refers to the S&P 500.

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Here are four beta examples:

1. Propanc Biopharma (PPCB) has over 19,000 beta versions. The per share price of the share ranged from $145.46 to $1.25 last year.
2. The beta version of data center company Iren Limited (Iren) is 4.2. Prices per share ranged from $58.28 to $5.13 last year.
3. The beta version of GameStop (GME) is -0.84. A negative beta means that the stock moves in the opposite direction of the stock market. Prices per share of GME ranged from $32.56 last year to $18.46.
4. The beta version of Toyota Motor Corp.™ is 0.22. Automakers' per-share price range per year is between $155 and $202.87.

When volatility is important

Under these constraints, volatility is important.

1. You are a short-term trader. Volatility creates opportunities for rapid price changes.
2. Your investment timeline is short. The investment schedule is short when you are hoping to liquidate some of your investments soon. For example, for the distribution of retirements. Volatility becomes a problem when you are approaching a liquidation period, as a sudden price drop reduces the amount of cash you can generate from selling. You may need to sell more stocks than you plan. This shortens the lifespan of your savings.
3. You make the rash decision under pressure. The most harmful behavior you can take is to sell your investment when the price is the lowest. Still, many investors make this decision under the stress of a recession. If there is a risk of a sellout when the market is interrupted, it is best to limit exposure to volatility.
4. You are not practicing diversification. Diversification mutes the volatility of your portfolio.
5. Invest speculatively. Speculative investment is unstable.

If volatility isn't important

Volatility is less important in these situations.

1. There is no need to settle your investment within the next five years. Short-term volatility isn't that relevant if you don't need to sell it right away. When prices drop, they can wait for them to return to growth. In other words, assume that the position you own is well established to recover.
2. I am sure the market will recover from the recession. Historically, the stock market has always recovered from a recession. If you think the trend will continue, you can withstand periods of volatility without panic selling or losing nighttime sleep.
3. We support high quality stocks and funds. High-quality stocks and the funds that own them are less likely to experience permanent and serious loss of value.
4. There is a diversification strategy. Behaviors and pairing that slightly offset assets cut down on the sharpest edges of volatility.

Many investors fear volatility, but they can focus on long-term strategy, quality and right mindset to manage.

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