The share market has not been volatile for a long time. It is meant to be volatile. Over the long-term shares are meant to grow more than having cash in the bank, but shares don't just go up in a straight line.
Cash will give you a guaranteed return each year, shares could go down 5% in one year, up 25% in the next year and then up another 10%. It's an opportunity when shares drop, like the 5% down year in my example. The key part is that you have to jump on that opportunity.
Take natural beauty company BWX Limited (ASX: BWX) as an example. It finished Monday at a price of $7.42, dropped around 8% at one point to $6.83 during Tuesday and then recovered 6.59% from Tuesday's low to finish yesterday at $7.29. The underlying value of BWX did not change by 6.5% each day.
A lot of people equate volatility to risk. To me, risk is the chance of you permanently losing money. Shares will be and should be volatile because it's made up of thousands of people trading shares every minute who have different opinions of what a business or share is worth.
Central banks around the world have heavily influenced asset prices and created low volatility. Any volatility this week and in the future is normal. I hope there's a lot more volatility to come because that will give all of us opportunities to buy shares at discounted prices.
Foolish takeaway
I'll be keeping my eye on the share price of BWX. I'll also be looking at other volatile shares like WAM Microcap Limited (ASX: WMI), MFF Capital Investments Ltd (ASX: MFF) and Altium Limited (ASX: ALU).
