With the US markets taking another heavy fall overnight, and with the Australian Markets expected to follow suit this morning, I thought I would take the opportunity to once again jump to the top of your inbox and remind you of a few key points to remember and take hold of during down trending markets!
1. We are not traders, we are investors – Traders look for short term positions and opportunities to try and make money in the moment. As a longer term investor, your focus isn’t on making your money today, but rather best positioning yourself for the longer term. You are not buying shares, you are buying companies. Traders will be trying to exit this market, investors should be recognising the longer term and holding tight.
2. The value of a company – As I mentioned above, we are investors not traders, buying companies, not ‘shares’. The current share market is indicating that the world’s top companies are worth 25% less today than they were three weeks ago. Sure, some companies will be directly affected by Corona (think Qantas, Webjet etc.), but are the majority of the worlds companies really worth 25% less than they were 3 weeks ago? Not a chance.
3. Plans were set in calm, not panic – Your current investments, asset allocations and our overall investment philosophy was not established and set during times of panic, but rather during times of stability. These were based on research, long term outlooks, and most importantly, your individual goals and circumstances. These haven’t changed in times of panic.
4. Drown out the loud voices – Not everyone in the world is panicking about investments and markets, it’s just the ones that are have the loudest voices. This can be most compared to Trumps election win in 2016 – he didn’t stand a chance based on the vocal minority, but it was the silent majority that one him the votes. The same can be said with this market. The loud panicked voices are not reflective of the majority of investors, but rather the panicked traders.
5. It’s OK to be uncomfortable – When playing a long term game, there can be discomfort in the short term. This is completely normal, and has been since the beginning of time. Nothing worth having ever comes easy and stress free. It’s about riding through the discomfort and making it out the other end.
6. It’s just a point in time – It’s so crucial to remember that what your account is ‘worth’ is only a reflection of a particular point in time. It changes every day, some days more than others. Don’t value yourself on one day, but value your plan and strategy.
The below chart shows how many times we have been down a path like this before, and what tends to happen in the longer term.
I hope the above points can provide some comfort and reassurance during this volatile period. Please take comfort in the fact that you have a plan in place, a long term goal and you are on the path to achieving it.
As always, I am here to take any calls or emails you may have at any time – day or night, weekday or weekend.
The information provided in this post must only be considered general advice. It has been prepared without taking into account any persons individual objectives, financial situation or needs. Before acting on anything in the article, you should consider its appropriateness to you, having regard to your objectives, financial situation and overall needs.