CURRENT MARKET CONDITIONS
To describe this year, and the last few weeks as a ‘rollercoaster’ in terms of the financial markets would be a massive understatement. We have endured the most radical upheaval of our financial system, with household names in banking and investment moving from “blue chip"to “in need of rescue” status overnight. Slumps in the value of shares and commercial property have led to the returns of our clients’ portfolios dropping sharply. What seemed like a distant problem for the USA and people seeking mortgages has had an impact on us all.
But What Now?
It is impossible to say if we have reached the bottom of the falls in the markets, but we would reiterate our advice to remain invested. History tells us that the stockmarket downturns of the 1990’s, 1980’s, 1970’s and indeed the Great Depression of the 1930’s did not last forever. Even when the country is nearing or in recession, the markets start to recover and recover quickly. Taking money out of your investments and putting it into cash may mean you miss the best of the recovery. So please be patient and sit tight.
It is a daunting time but as many financial experts have stated over the last few weeks, the stock market is forward thinking and the market rally will come before the economy comes out of recession. Therefore, if you are brave and have surplus cash, this may be the right time to invest. Seasoned fund managers such as Neil Woodford (Invesco Perpetual) have started to buy equities and the worlds most successful investor, Warren Buffet, has summed up his reasoning for being proactive in the markets “If you wait for the robins, spring will be over”.