Riding out the investment storm
Many of you will have noted with some concern recent political events and since seen this impact on the value of your portfolios.
There’s lots to contend with – the war in Ukraine, the continuing impact of COVID, and of course, maybe the most talked about, the issue of soaring inflation, at its’ highest level for decades. Central banks try to address this by increasing interest rates, which consequently results in increasing yields on bonds and we have also seen global equity markets falling. It can all feel rather sombre!
It is only natural that you might feel things are more uncertain than previously. However, don’t forget all the crises you might have lived and invested through in the past, for example, the banking crisis of 2008, the after-effects of 9/11 attacks or even our concerns about whether the world might be able to operate past the millennium as we had to contend with potential Y2K software issues. History tells us that over the medium to long term, the markets recover from these uncertainties. Capitalist markets will continue to seek out profits.
Essentially, disinvesting based on today’s news is probably the worst thing you can do. What is currently only a “loss on paper” will be crystallised on the day you sell. And if you do sell, when is a good time to reinvest? Selling at the bottom, investing at the top and repeating the process is certainly one good way to guaranteeing permanent losses!
Generally, our clients’ portfolios are well-diversified to ride out any investment storm and we would suggest the ideal action is not to take any action. However, as always, if your financial and personal circumstances have changed, so that action might be needed, then please do get in touch.