We understand you may be anxious with the recent falls in bond and share markets across the world. This article aims to provide an update on what’s happening and some insights to help you navigate an uncertain period.
What is happening in investment markets?
A combination of concerns on the geopolitical, COVID-19 and inflationary fronts have weighed heavily on markets in recent weeks, triggering volatility across stocks, cryptocurrencies, and commodities.
In the US, markets have experienced falls of around 10% with technology stocks being the hardest hit, down roughly 16% from record highs set earlier this year. In Australia, the ASX200 is down about 6.5% since the start of the year and currently sits at its lowest point in 3 months.
What should I do with my investments?
While the economic environment feels uncertain, our focus remains on executing our proven investment process and positioning client portfolios for long-term growth. In supporting clients with investment decision making, our primary goal remains the achievement of long-term outcomes, not making short-term predictions.
At times like this when markets react, it’s important to remember that while extreme bouts of volatility might unnerve short-term speculators, for the long-term investor, patience is a virtue. You don’t have to think too far back to acknowledge the benefits of remaining invested through the onset of the pandemic in February 2020 or the Global Financial Crisis. Initially, markets plummeted, only to recover and progress to new highs.
We can appreciate for many of you, the fear of losing money, even if only on paper, is a powerful emotion and difficult to overcome without the calming influence that expert advice can provide. As always, speak to your Adviser if you are unsure or concerned. Making big decisions without advice can be detrimental to your financial position and long-term strategy.
What is driving share markets down?
Share market declines have largely been the result of Central Banks (the Federal Reserve in the US and RBA here) raising interest rates and moving away from propping up the economy with stimulus measures that have driven markets since 2008. The shift in policy and thinking is an attempt to stamp out the highest levels of inflation witnessed in 40 years. You can read more about what rising interest rates might mean for share and property investors in our recent article published on our website last week.
Interpreting the signals from investment markets can be challenging, particularly in an environment like this with so much uncertainty over inflation, Central Bank policy, the labour market, and the war in Ukraine. Against this unusual backdrop, we need to be careful in drawing parallels to history and making panicked decisions.
Please call the office if you would benefit from speaking to an Adviser about your investments at (03) 5224 2700.