The recent events in worlds markets have everybody talking this week. Fear has gripped the market and has investors across the globe worried about what will happen next. Many commentators predict that the selloff in the market is deeper and wider than initially predicted and this may only be the beginning of a turbulent time in the market.
Yet the question remains, what do you as an investor do next? To answer the question we have to step back a bit and look at the bigger picture. The global economic picture has been one of uncertainty over the last 12 months and you can argue even longer. Growth in Europe has been slow without signs of any real significant pick up while the Chinese economy has been slowing as well. Locally the equity market has had a very strong run during the first half of the year leaving many investors and analysts asking, when will the correction come, not if. It seems that everything has now started to fall into place with the current market downturn as we finally start to see the effects of the ongoing volatility.
After considering all these events, one still needs to factor in the decision to increase the interest rates in the US. You may have a very volatile situation over the short to medium term.
Volatility has a way of spooking even the most experienced investors from time to time. The catch is to look beyond the cycle and see the opportunities rather than try and apply damage control on the short term. In volatile times like these damage control is almost futile as you end up on the wrong side even with the right intentions. As an investor to liquidate your position in the market now would mean realizing your losses. Instead of liquidating your position you should look to enhance or increase your position by using these market downturns to get into the market when prices are cheap and investors are willing to sell at such low prices.
Long term investing requires patience and discipline in the short term. Successful investors are always looking for opportunities regardless of the current market conditions
As our unit trust funds and the way in which we manage our portfolios in general, are long term orientated we aim to position ourselves and our clients for long term success and returns without short term intervention or damage control.
To quote the Sage of Omaha, Warren Buffet, “Be fearful when everyone is greedy and greedy when everyone is fearful”.
If it works for Mr Buffet we sure can learn from that philosophy as well. Sanlam is committed to provide its clients with risk adjusted returns over the long term.
When making a decision it is always best advice to get as much information as possible before committing to act.
Please do not hesitate to contact us should you require any assistance or commentary on the current market conditions.