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Robson Partners Special Market Update Posted on October 9, 2018
In this Special Market Update, we analyse the key messages to take on board so that you are up to date, informed and better equipped to make decisions about your financial future.
We’ve also attached some “quick fact sheets” to help you understand what’s causing this volatility and what it means for you.
What’s happened in the financial markets?
Many factors have contributed to the recent falls in share markets. Since the Global Financial Crisis of 2008/2009, the world economic recovery has been a bit of “stop and go”. There has been a series of political events across the world, natural disasters, and more recently, the US debt debate and concerns over the problems in Europe. Then last weekend the ratings agency Standard & Poor’s downgraded the US credit rating from AAA to AA+. All these factors culminated in extreme volatility across global markets over the past week.
Is there any good news at all?
Yes, on the upside, Australia does not have a huge government debt. The Australian market is somewhat more insulated from the global issues because our market is more dependent on “emerging economies” such as China and India, which are less affected by the current global market falls. Relative to other parts of the world, Australian banks are also quite financially strong. Do bear in mind that markets will continue to go up and down for a while due to ongoing uncertainties in political and economic environments across the world.
The Australian market is currently very attractive valued at 10-11x price to earnings ratio and 5% dividend yield. The Australian market has historically traded at between 14-15x price to earnings ratio. As famous investor Warren Buffet says;
“When others are greedy, be afraid…
…But when others are afraid, be greedy.”
So what should I do?
At times like these it’s really important to stay calm. Remember some of the fundamental principles of investing, such as making sure you have a diversified portfolio, and investing for the long term. By taking a long-term approach to investing, you give your investments time to recover from the downswings that are a natural part of any investment cycle.
What’s my next step?
If your financial situation allows you to maintain your current position, then history and investment fundamentals show us this is the best course of action. If you are under distress or you know of upcoming changes to your personal situation we recommend you contact our office.
The Robson Team are here to help you manage risk and look at your long-term financial strategy. This is the best way to build and preserve wealth, so please don’t hesitate to contact Martin McGrath from our office to discuss your situation and to clarify any questions you may have.
For further reading on the current market conditions, including commentaries from:
Fidelity market Update
Advance Asset Management and;
Investor questions on the current market volatility.