Was Your Investment Affected By The Recent Market Correction?
As you will be aware, we have seen some corrections in global markets fuelled largely by concerns about rising inflation in developed markets and rising bond yields, which could have a number of knock on effects in the cost of credit for emerging market economies and many companies that have feasted on cheap money to fund expansion.
The severity and speed of this two day decline also reflects our opinion held over the last six months or so, that valuations are simply too high given the menu of potential problems facing markets, such as the US debt burden, global trade agreements and far reaching political uncertainty.
To put some perspective into this drop, it puts us approximately where we were just prior to Christmas 2017 and has been across all sectors. This reflects the herd mentality that has fuelled the recent rise in markets and the sentiment that seemed all too happy to shrug off potential underlying problems.
All in all, we feel that whilst on the face of it, this correction does present some buying opportunities, this bearish sentiment could have further to run over the coming weeks and months. We have long been building in protection against these falls through use of Structured products for our clients and the use of low cost ‘thematic’ exchange traded funds that have so far fared better than the indices overall.
Looking forward, we do feel that there will be some value creeping back into global equities and cause for further use of protected, fixed coupon investments to swallow some of the increased volatility we feel may be present.
Given our long term outlook, we see no need to join the herd and panic sell short term. Particular focus will be on the inflation numbers in the US and Euro area, and the rhetoric coming from central banks for clues as to how quickly and aggressively interest rates may rise.
IF YOU WOULD LIKE TO DISCUSS YOUR LONG TERM INVESTMENT STRATEGY, PLEASE DO FEEL FREE TO CONTACT US BY COMPLETING THE BELOW FORM.