The last quarter of 2021 began with a rollercoaster ride for equity markets. We have seen large movements in blue chip shares daily. After the strong market recovery subsequent to the initial COVID pandemic period, there was always going to be a correction. However, nobody knew when and what the catalyst would be.
Stock market corrections are healthy and provide new investors with buying opportunities. The crucial principle for existing investors to remember is don’t panic, stay on course and stick to their strategy.
Most developed global economies have entered a post COVID pandemic environment with “new normal” business activity and travel resuming. Central banks around the world have indicated that the low interest rate environment will be preserved for the short to medium term, with some pullback on liquidity incentives injected into economies. Global inflation does not appear to be a major concern and global growth is normalising. These are all positive factors for equity markets, economies and listed companies.
Certain sectors find themselves in so called “sweet spots” and will be beneficiaries of the future economic environment. These sectors include Cyber Security and Biotech as well as increased momentum to renewable energy from fossil fuels.
Ensuring that your portfolio is appropriately positioned is extremely important.
Equity markets always recover, it is just a question of time. Long term investors have seen this movie before and will take a step back, relax and let the current turmoil run its course. Investors fortunate enough to have some cash in the kitty, should be open to some buying opportunities in selected sectors and markets. After all, they will be buying quality stocks at a discount. The foolhardy investors will be those that panic and sell during this period of uncertainty.
Whatever you do, make sure that you are getting good solid investment advice over this period of volatility and uncertainty. Feel free to contact Activ8 and speak to one of our advisors.