Volatility? More Like Opportunity – Second Edition
If you have turned the TV on this week or read the news, you’ll probably be well aware that share markets have been experiencing a bit of volatility in recent weeks.
You may have even read headlines like “International Markets Plummet” or “US Markets Plunge on Investor Fears” – these are dramatized headlines to try and sell papers. It works, too.
So, what is happening in real terms? Markets have been up, down and sideways this week. Earlier this week (and late last week) there were some bad days, don’t get me wrong.
Were they the worst days ever? No.
Were they even the worst days this year? No.
These were the biggest drops since February, 2018.
This puts things into perspective a little.
Overall, the US stock market only retracted back to where it was in July of this year – and it has even recovered slightly since then! At the time of writing this article, the market is where it was in mid-August.
Those of you that have been with Me for a little while will remember reading my article on market volatility and what it can mean on February 9th this year. If you didn’t catch it, you can check it out here.
For now, I guess the main question to ask is:
What’s different about this week’s volatility compared to earlier this year, last year and every year before that?
The answer? Nothing. Markets went up, markets went down and markets went sideways then, they do it now, and they will do that forever and a day to come.
Nothing is different. The reasoning and logic may be different – trade wars, interest rates etc. but there will always be volatility.
Now don’t get me wrong, these can be valid reasons for volatility, and sometimes volatility will be worse than other times, however if it wasn’t for these reasons, it would be something else.
At times we can predict market movements based on the reasoning and logic and get ourselves in a better position to weather the storm that’s coming, but sometimes they creep up out of nowhere (think 9/11) and rear it’s ugly head.
Markets will always move, because the very nature of a market is that it moves.
Where does this leave our superannuation accounts? Did our retirement go down the drain this week?
Per my previous article in February, there are great opportunities for long term investors when there is extreme market volatility – you can buy when prices are down and ride the long-term wave back up.
After all, majority of readers will be late 60’s before they can even access their super money, so you can bet your bottom dollar (pardon the pun) that we will be having this conversation many, many times between now and then.
In the meantime? Focus on what we can control – get on top of contribution strategies, save hard, use a good budget and control your own behaviour – after all, best to worry about what we can control before we worry about things we can’t!
Please give me a call or reply to this email if you want to chat further about the above, or anything else!
Have a great weekend,