In addition, Washington may also fuel volatility in the coming week. Congress needs to pass a continuing resolution by September 30th to keep the government funded and avoid yet another government shutdown. While I don’t expect a shutdown, the risk of that scenario increased somewhat Friday following the announcement that House Speaker John Boehner will resign from Congress at the end of October.

Tips for Navigating Market Bumps

So how to contend with the rocky road ahead? Rather than attempt to time each swing, investors may be better off managing the risks embedded in their portfolio.

While value stocks are at risk should economic growth estimates continue to come down, momentum companies are exposed to more spikes in volatility, a factor that has contributed to biotech’s recent underperformance. Conversely, so-called qualitystocks, which generally have strong return on equity and low debt, may be better supported should volatility continue to remain elevated.


Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.