Local Life - Wigan - August 2021

64
Keep Calm
and Carry On….!
2020 was a very challenging year for investors with most
markets falling heavily in March/April on the back of
Covid 19 only to see an incredible recovery assisted by
the vaccine announcement in November.
Covid 19, Brexit worries and the US elections created
significant uncertainty resulting in high levels of volatility
in portfolio values last year. Triggers for market volatility
can come in many different forms - policy uncertainty,
earnings reports, geo-political unrest and how could we
forget, global pandemics.
I fully understand that market swings can rattle even the
most seasoned investors however it is just part and parcel
of longer-term stock market investing. Whilst intuitively
the temptation is to ‘do something’ whether it is to
reduce risk, change the funds or dare I say move to cash ,
often the best advice is to sit tight if you have a properly
diversified portfolio and wait for recovery.
A well-defined investment plan tailored to your goals can
help you navigate the ups and downs of the market, and
to take advantage of opportunities as they arise. Market
volatility should be a reminder to review your investments
regularly to ensure that the overall risk in your portfolio
fits your personality and allow you to sleep at night.
Keeping perspective
Market downturns may be unnerving, but history shows
that markets have been able to recover from declines and
can still provide investors with positive long-term returns.
In 2015 and 2016, this general pattern played out. U.S.
stocks experienced sharp drops in August 2015, when
China devalued its currency; in January 2016, as oil prices
dropped; in June of 2016, after the “Brexit” vote; and in
the run up to the 2016 U.S. presidential election.
Still, during that 2-year period, the market was up close to
8% cumulatively.
More recently, despite the covid impact client portfolios
have not only recovered but are indeed showing a very
healthy profit due to the active management and the
strong market bounce. Those investors that ignored
the market noise and held tight have been very well
rewarded.
Be comfortable with your investments
If you are nervous when the market goes down, you may
not be in the right investments. Your time horizon, goals,
and tolerance for risk are key factors in helping to ensure
that you have an investing strategy that works for you.
Do not try to time the market
Attempting to move in and out of the market can
be costly. Studies from independent research firm
Morningstar show that the decisions investors make
about when to buy and sell funds cause those investors
to perform worse than they would have had the investors
simply bought and held the same funds.
If you could avoid the bad days and invest during the good
ones, it would be great - the problem is, it is impossible to
consistently predict when those good and bad days will
happen. The best days typically come very shortly after
the worst days.
The adage goes it’s ‘time in’ the market not ‘timing’ the
market which creates wealth. We’re here to make it as
comfortable as possible but the market’s gains are only
there for those who can ride out a few bumps on the way
The value of investments can fall as well as rise and
you may get back less than you invested
David Barton
APFS Cert CII (MP)
Chief Executive Officer
If you would like more
information, please feel free to
get in touch on 01257 423800.
Remember all investments can fall as well as rise in value so investors could get back less than they invest.