The wisest investors do not avoid volatility— rather they understand the difference between risk and volatility.
Some may view volatility as risk especially if they see the stock market lose some value in relation to their own investments for a time. Putting it in perspective is important. Risk has far more to do with the strength or weakness of the companies that you own. Some who invest in a stock mentioned by a golf buddy or friends chatting at a social gathering may realize later that the reason the investment faltered was due to a lack of research or knowledge on their part. This is why using the experience of investment managers and funds with a good track record can reduce risk.
Volatility simply represents how share prices behave. High-quality stocks or funds can be volatile due to market variables such as the price of oil dropping or rising, potential interest-rate fluctuations, threats of war, sovereign debt issues such as in Greece; or monetary policy, such as exchange rate variables in the US, UK, Japan, or China.
Diversify among good investments. Always look to diversify among investments with these qualities: companies with substantial assets, solid business base, earnings, and good dividends.
What can you apply in your own portfolio? We recommend utilizing highly trained fund managers, and/or advisors trained and licensed in this field.