What we all hoped would only be be slight correction in the markets turns out to be an outright panic.
We’ve seen worldwide sell-offs as investors de-risk their portfolios. Taking some profits where possible.
On the local front it is not a very pleasant picture either, as the JSE went into further negative territory following global markets, and the rand is also taking hits from all sides.
Jumping ship during declining markets carries its own long-term risks. As long as you ride the wave, it remains a movement, if you jump you take the loss.
Based on the current reactions it is very much likely that we could see further declines in the weeks and months to come, until we get to a point where the covid-19 fears eases, and the world starts to return to some sort of sanity and normality.
Absolute fear and uncertainty are the main drivers of this market carnage.
What you will find at the other end of this, is several really good and really cheap companies to buy, if you have the appetite to get back in.
This is also a very good example of why having a well diversified portfolio will protect you against the full blunt of a sell-off. Different fund managers have different market views and have diverse styles when doing asset allocations, and a well structured portfolio is key.
It is a crucial aspect for us when managing monies to not only look at the upside potential when constructing portfolios, but also be aware of the client’s experience if and when there are greater downward movements.
Contact us, should you need some guidance.
Jacques Hodsdon – MCom Tax | CA(SA) | CFP ® is a Director of SPI WEALTH. For enquiries contact, jacques@ spiw.co.za or 013 752 6566
