In light of market movements over recent days it seems almost inevitable that we revisit the subject of investment volatility at this time.
We’ve certainly seen some significant falls in markets over the last couple of weeks, blamed on several factors, including the impact of a US-China trade war, a spike in US bond yields and a nervousness ahead of ‘earnings season’.
This prompted us to look at the last article we published on our website about volatility – which was back in February.
At that time we looked at what we can all do to ensure that we are well protected against short term market movements.
In essence this comes down to making sure there is a decent ‘cash cushion’ in place to meet planned expenditure and emergencies and a contingency plan in place as to from where to access capital, or supplement income, should the market waters continue to be choppy for some time to come.
What was clear though from looking back at that article from February is that after we published it things settled down, and markets began to rise. This rise though was, as it most often is, achieved through small incremental gains day on day interspersed with some falls.
When this happens we all tend to forget that whilst markets spend more time going up than down it is these ‘downs’ that tend to be sharper, more headline grabbing, and, given human nature, more likely to instil concern and worry.
We’ve designed our portfolios to be adhered to irrespective of short term market movement or sentiment and remain confident that they remain very well placed to do their job but we also know that when the headlines strike it’s easy to worry.
It’s for this reason that we’re always happy to hear from people when we get ‘bad’ weeks. It’s never inappropriate to ‘check in’ on the contingency plan or to reassure ourselves that things are still on track – and if they’re not, to do something about it together.