IS THIS THE NEW GFC?

As you are all aware, the media has confirmed that again… the sky is falling! Global markets are routed and the average retiree and pre-retiree needs to gear up for financial Armageddon! Truth or fiction?

While the current market volatility is a little unnerving, our view is that we are not experiencing a repeat of the GFC as the underlying economic conditions in the immediate pre-GFC years and now are very different.

Recent developments are not as negative as the markets (and the media) seem to portray. Their 12-month outlook is for positive returns for equities over bonds. The recent fall in share prices has improved the overall yield of shares and relative value as well.

It is very important when investing for the long term to be objective about your investment strategy and your underlying managers. Over the past 12 months or so we have spoken with many of our clients about the concerns regarding the markets going up in a straight line, and that there remained a very real risk of a correction in share prices which is after all a normal part of market cycles. Moving into and out of markets and trying to anticipate the market’s next move is fraught with danger, and not part of the MSI Taylor investment philosophy which calls for investing in high quality assets, using a diversified strategy to moderate risk, and focussing on the client’s core objectives.

Our portfolios, and specifically our underlying managers, are subject to regular review although our focus remains on long term outcomes not short term volatility. Chopping and changing portfolio positions in response to market volatility is almost guaranteed to be unsuccessful. While we do not like to see our portfolio performance impacted by short term volatility and sentiment, we are confident that the disciplined application of our processes will benefit our clients over the longer run. For our full analysis of the current situation, please click here. As always, if you have any concerns in relation to your own portfolio please contact your Adviser.