Adviser Spotlight – Mulling over markets

The world, particularly here in the UK, feels like a very messy place at the moment, which is predictably having a short-term impact on investor sentiment towards shares and investing in general.

At times like these, many investors (led more by emotion than reason) tend to run for cover or delay investment decisions until things “get back to normal”, “settle down a bit” or “become clearer.”

Perhaps it’s me, but I struggle to recall any time when the world was ever a normal or serene place, and the best time to invest was clear and obvious!

Of course, leaving the EU has become a very tense, divisive and unsettling affair, but will the outcome of the negotiations be a one-off event that determines a fixed political and economic landscape for the UK forevermore?

Or, will it simply be the beginning of a journey that we can expect to constantly evolve, twist and turn in the years to come?

Either way, what will these events mean for stock markets over the next five, ten and twenty years? Will they have any lasting impact at all?

The truth is, we just don’t know, and this is one of the reasons why investors “feel” jittery here and now.

The only thing we do know is that the forces that have always dragged markets forward (capitalism and human enterprise) will ultimately do so again and economies and markets will continue to expand over the long-term.

We also know that volatility creates opportunity.

If you were in the market for, say, a new house and prices suddenly dropped by 10%-15%, you’d be tempted to make that purchase today. Of course, you appreciate prices might have further to fall, but no-one would blame you for adopting a “bird in the hand” approach.

This is where we are with share prices at the moment. Accepting it’s impossible to call the perfect time to invest in shares (or increase your existing share exposure), prices are significantly lower than they were just a few months ago.

Granted, investing more in shares when markets are volatile isn’t easy from an emotional perspective, but don’t disregard it simply because it might feel counterintuitive in the present “doom and gloom” climate.

If you are considering it, be sure to take advice, as it’s important to thoroughly understand whether such a course of action would suit your attitude to risk and long-term financial plans.

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