After a strong rebound in share markets from the February lows, we look to have entered a rougher patch. However, with most share markets offering reasonable value, global monetary conditions remaining easy and no sign of recession, the trend in shares is likely to remain up. But times like the present can be stressful as no one likes to see the value of their investments decline. The key for investors is to:
- recognise that we have seen it all before as periodic sharp falls are regular occurrences in share markets.
- avoid selling after falls as it just locks in a loss.
- allow that when shares and all assets fall in value they are cheaper and offer higher long-term return prospects; look for investment opportunities that pullbacks provide.
- recognise that while shares may fall in value the dividends – or income flow – from a well-diversified portfolio of shares tends to remain relatively stable and continues to remain attractive, particularly against bank deposits.
- Turn down the noise. At times like the present, the flow of negative news reaches fever pitch, making it harder to stick to an appropriate long-term strategy let alone see the opportunities that are thrown up.
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