Stand back and observe the bigger picture Putting the current stock market decline in context

Stand back and observe the bigger picture: Putting the current stock market decline in context

There’s no doubt hyperbolic headlines depicting the recent falls on the world’s financial markets are potentially anxiety-inducing. With the FTSE 100 Index falling to its lowest levels since May 2017, the effect of the headlines has been to generate a sense of uneasiness; we’re here to remind you that this shouldn’t be the case.

Instead of reacting to the volatile nature of the markets (or the sensationalist headlines) with panic or knee jerk decisions, we think that it is wise to stand back, observe the bigger picture and take a calm and considered approach.

Rarely, if ever, should short-term stock market volatility cause you to change your long-term financial plan. Especially if your goals and aspirations remain unchanged.

I believe that investors should remember the fundamental principles of investing:

  • Over the long-term, investors have enjoyed attractive real-returns from the world’s stock markets. That’s not something we’ve been able to say about deposit accounts for many years, which currently give a real-terms loss
  • Volatility, as we have seen over the past 48 hours or so, is to be expected from time to time. Even when the world’s economies are fundamentally strong as they currently are based on commentary from many leading economic commentators
  • Trying to time the market; looking for the optimal moment to invest or withdraw capital is proven to be almost impossible

Now is the time for calm heads and clear thinking, with a focus on the long-term. Deviating from your chosen course is not what any adviser should be recommending.

However, it’s only natural that you may have some concerns, if you do please contact me.

In the meantime, stay calm, stand back from the panic-inducing headlines, and remember the fundamental principles of investing.

The value of your investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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