307 APRIL 2020 - Gryffe Advertizer

Next deadline - Wednesday 15th April
Gryffe Advertizer | www.advertizer.co.uk
Stock market falls…putting things in
perspective
by Carl Melvin, Affluent Financial Planning Ltd
The Corona Virus pandemic is all over the newspapers and TV news.
Reports of individuals panic buying hand sanitiser and toilet rolls is
surely evidence of people acting irrationally. The world won’t end,
but investors are very concerned about how their investments and
pension funds are being impacted by current events. What do you
do when the stock market is falling sharply?
1. Why are world stock markets falling? Stock markets rise and fall
in line with 3 things – economic news (companies make profits or
losses), world events like war, pandemics, etc and finally, Investor
sentiment – how people react to what is happening. If people
are optimistic then stock markets rise and if fearful then stock
markets decline.
2. Stock markets are resilient – they can handle good news or
bad news, but uncertainty is what causes stock markets to fall
sharply. The lack of certainty causes people to be fearful and this
is magnified until a degree of calm returns.
3. Stock markets recover - it may take time for markets to recover
from a heavy fall but recover they will – and the long-term investor
will be rewarded for her patience.
4. History teaches us a lesson – previous falls are often followed by a
strong recovery within the following 12 – 18 months, so selling out
in the heat of a big fall in share prices is a folly.
5. Think of this as an opportunity – if the prices in the supermarket
were lower than last month, you would call this a sale – the stock
market is currently on sale with prices lower than before, so
for those seeking to invest it offers an opportunity to buy at a
discount.
6. For every seller there is a buyer – if you sell your investments out
of fear, then remember that there must be someone willing to buy
your investment – unless you bought a poor-quality investment or
illiquid asset in the first place.
7. Buy low and sell high – is the key to investment success. This
means when prices are lower (as they are now) then you should
invest more, and when prices are high you should take your
profits.
8. Diversify – one should not have all one’s eggs in a single basket –
a highly diversified global portfolio offers less risk and the scope
for long term growth. A portfolio should be rebalanced at least
annually to capture investment gains.
9. The falls are temporary – and the rise of stock markets is
permanent over the longer term – history tells us this. Think long
term, not short term.
10. It’s too late to react – the falls have already occurred, and markets
may fall further before they recover. Now is not the time to change
your investment strategy or try to second guess the market
movements. Sit on your hands and let the market recover in time
– rash decisions now could cost you dear in the future.
This information is not financial advice. If you require advice you should consult a professional adviser.
The first meeting is normally free and there is no obligation. Call us for a FREE financial review on
01505 59 50 60 or email: info@affluentfp.co.uk Alternatively, pop into the Affluent office opposite
Amaretto restaurant on Main Street, Bridge of Weir. www.affluentfp.co.uk
The value of an investment and the income from it could go down as well as up. The return at the end
of the investment period is not guaranteed and you may get back less than you originally invested.
Past performance is not a reliable indicator of future results.
8 ALL EVENTS AND DATES ARE SUBJECT TO CHANGE DUE TO COVID-19