Each time the equity markets fall there is always a reason and this time it is China slowing down along with imminent US rate rises. The reasons each time are always nuanced and different, but the pattern and reaction is the same; people get emotional and sell at the wrong time instead of just holding tight. Those of us who are in regular saving plans, should be thanking the markets for this opportunity as now we will be truly dollar cost averaging (buying units at lower prices). If we are lucky to have cash in the sidelines, we need to buy now. The world is not coming to an end, over the past 100 years there have been numerous reasons for slumps, from World Wars, oil embargos and terrorist attacks, but the results are always the same; markets go down and then come back by more than they went down, it’s cyclical and to make knee jerk decisions is to risk capital. So despite there being some turbulent times ahead, the key is to keep calm and carry on with your strategy.
At GWM we advise on long term, balanced investing which means our portfolios don’t contain only equities, instead enjoying a diverse range of assets from commodities, property and bonds. Below is a chart highlighting how such diversification can prove beneficial during these times, with our iGuard range outperforming the FTSE index significantly.
As a closing note, we reiterate that all investors need to stick to their plan: rebalance portfolios where necessary and in case of regular savers, continue saving, in the long run this fall will look like the blip it is.
We hope this brief summary will ease any concerns you may have, but if you have any queries at all then please don’t hesitate to contact your adviser.