Ok, I accept that the current market shenanigans may be my fault. This often seems to happen when I am away and yes, I am currently in Canada at a conference (asked to present but I still get to pay my own way, so no junket!).
Despite the recent market volatility I was still surprised when I read the papers today. When the RBS (Royal Bank of Scotland) advised investors to "sell everything" it certainly made the headlines and no doubt caused concern with some clients.
Remember though that the RBS itself needed to be bailed out in 2008, was nationalised and was fined billions of dollars after dodgy deals. Not really a great track record. Still, bad news sells and the advice from RBS made the headlines. And, who knows, it may be right. There are always numerous market forecasts ranging from positive to negative. At times of heightened uncertainty and volatility (now) these forecasts are often exaggerated. RBS’ prediction is that China will implode and take down the rest of the word economies. Yes, it MAY be right, but it is probably wrong. If you predict doom and destruction every year you will eventually be correct one year, while getting it wrong the majority of the time. Most economists expect China to grow at 6-7%.
So no, I am not personally selling everything. Trying to 'time' market bottoms is a mug’s game and not sound investing. You cannot predict market mood or sentiment. Dealing with actual numbers is easier…predicting mood is practically impossible. For most clients in pension phase, they will have several years of drawings in safe, defensive assets allowing us to ride out this volatility. For younger clients in accumulation phase and still working, market falls allow us to buy quality businesses (direct or through a managed fund) at discounted prices.
Still, if you are losing sleep over the recent volatility it may be appropriate to revisit your investments and adjust the asset allocation if needed. Just don't react to attention grabbing newspaper headlines.
As always, please call to schedule an appointment if you would like to discuss in person.