RBS hit the news recently when one of their analysts suggested investors should “sell everything” ahead of a “cataclysmic” year to come. While it makes a good headline, especially when markets have had a poor start to the year, it’s certainly not the consensus view or even generally considered helpful.
In the words of M&G, one of the largest active investors in the UK, “we need to be careful to separate fact from fiction (or forecast, if you prefer)”. Various factors affect the market, including investor sentiment. The start of 2016 saw concerns about market falls become self-fulfilling as the momentum of selling drove prices lower. But the signs are the sell-off was overdone and that when attention is given to economic fundamentals rather than sentiment, we’re in a better position than many fear.
Now, then, is not the time to be frightened out of the market - itself a dangerous move as selling after a fall means selling at a reduced price. Stock market-based investments will always experience volatility and can of course go down in value as well as up but a well-chosen, up-to-date portfolio should benefit when markets recover. Holding for the recovery is a much more reliable strategy than trying to reinvest at the right point in future.
You may, however, wish to review your portfolio to check the underlying investments are sound and that your exposure to investment risk is in line with what you are comfortable with. We are currently offering this service for free so please get in touch with Richard Higgs on 0117 966 5699 or at firstname.lastname@example.org.