Global sharemarkets fall sharply – what to do?

The run of sharemarket records has been broken.

After reaching all-time highs and experiencing the longest period in history without a decline in value of more than 5%, US equity markets have fallen the most since 2011, the most in 6 ½ years.

The sell-off comes after: a record start to the year, +5.6% (the market has retraced all of January’s gains), a strong US employment report on Friday, including a larger than expected pick-up in wage growth, and rising US Treasury yields over the previous days.

Combined the fear of greater than expected increases in interest rates by the US Federal Reserve (Fed)), high market valuations, and an over brought market (technicals) sentiment has turned quickly, leading to the sharp fall in the market over recent days. More may be likely – who really knows?

Nevertheless, a pull-back in the market has been long overdue and the underlying fundamentals remain good e.g. global synchronised growth

What to do in times like this? Listen to your investment advisor, ensure you have a truly diversified portfolio, and take a longer term approach.

This article is timely given the recent market volatility.

It highlights Goal-Based Investing and 4 other trends to look out for in 2018.

I hope the people that are advising you are across these topics, in particular:

  • Goal Based investing – this is key focus on this Blog site. This is fundamental.  The focus on how much growth assets one should have, a return and benchmark focus, and target date type funds may not deliver desired outcomes to meet retirement needs;
  • Responsible Investing. A responsible investing and ESG framework / policy is important for sustainable investment outcomes;
  • Uncertainty – well that has certainly risen over the last couple of days! Nevertheless, it was in the background given the very low level of interest rates and the high valuation of equities, the US in particular. The article points to the increasing allocations to alternatives as a means to truly diversify portfolios and make them more robust in the face of market uncertainty and volatility.
  • It is likely that ETFs could play an important role in meeting investment objectives

 

Bitcoin has lost its shine!

 

 

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