In light of the recent volatility in both our domestic market and markets around the world, the following article that appeared on CNBC is worth a read by anyone with exposure to sharemarkets.
As we keep saying, we can’t control markets, but by investing in good quality profitable businesses we can mitigate risk of loss over the long term.
If you have any concerns about your portfolio and the current volatility, please do not hesitate to call me on 07 4042 4000.
“Panic-selling is the worst thing you can do,” Joe Mallen, chief investment officer at Helios Quantitative Research. Instead, “look for opportunities to put unused cash into investments you have been considering. Consider it a time when everything is briefly on sale and buy into broad market funds or individual stocks you believe in long term.”
This could also be an opportunity to re-balance your portfolio. Be sure you’re including a mix of stocks, bonds and other securities to lessen the impact of any potential loss. Consider buying more stocks while prices are low, but don’t give into the temptation to “panic-sell.”
“The best thing would be to buy more, or at the very least hold tight”. “The worst thing to do is sell into a market decline if your long-term objectives haven’t changed.”
Don’t watch obsessively
During times of volatility, investing expert Warren Buffett suggests keeping a level head. In response to market swings in 2016, he said: “Don’t watch the market closely.” If investors are too worried about their stocks dropping “a little bit … and think they should maybe sell them when they go up, they’re not going to have very good results.”
So don’t try to time the markets. “It’s a natural instinct to want to reduce your exposure to assets that are declining”. But “resist the urge.” If it helps, stay away from the news.
Don’t be short-sighted
Many investors can feel overwhelmed by market volatility. A 2017 survey by Ally Invest found only one in three millennials is investing in the stock market because they find it “scary or intimidating.”
“While your gut instinct might be to sell certain positions while the markets are going haywire,” “try to take a deep breath before making any rash decisions.”
Experts recommend starting slow, remaining calm and looking at the big picture. Buffett and investing experts Mark Cuban and Tony Robbins say index funds are a good way to do that. Index funds hold every stock in an index; offer low turnover rates, attendant fees and tax bills; and fluctuate with the market so there’s no risk of picking individual stocks that underperform.
After all, young investors have one of the most “valuable characteristics of investing” on their side: time.
One of the biggest regrets of adults is not investing sooner. If you have yet to invest into the market, consider this volatility a great opportunity to do so.
When it seems like the sky is falling, do your best to remain calm and remember that corrections and market downturns are normal and healthy. As an investor, you never want to make decisions based on emotions, especially fear, so first and foremost, try to remain calm.
The best strategy is to “maintain your long-term perspective.”
The above article was taken from CNBC.