It is very easy to look at the market at the moment and understandably show some fear and things do look scary, with many major markets losing up to 4.5% a day over the last 72hrs, although a couple of European indexes are up today! It is important to put into context; there will be lots of trigger selling due to various computer systems etc. and sometimes these are soon followed by purchases to get back into the market. I believe that the actual volume of trades is not particularly high which could support this hypothesis.
If you look at the constituent sectors today most are down ; Financials -2.4%, Basic materials -1.83%, consumer non-cyclical -1.46%, Energy stocks -3.3%, industrial -2.94%, utilities -1.16% etc. Only cyclical consumer stocks seem to be holding but these are buoyed by a couple of particular companies, Carnival (cruise liners) and Burberry (apparel), Intercontinental (hotels), Marks & Spencer.
Part of our Investment philosophy uses multi-asset investing and well diversified portfolios; the reality is that no one really knows and we try to construct a well diversified portfolio of assets that exposes investors to the long term real trends of investing, helping to manage out the short term volatility of the speculators. We then appoint the appropriate talent & expertise to use their experience, information and judgement to keep our clients on track and deliver the longer term results required.
In this way we don’t try to respond to an individual day or 2 of trading; you will know that the market can come back as quickly as you see it dip and know the old adage of ‘time in market’ is more important than ‘market timing’.
They don’t ring a bell when the markets hits the top and they don’t ring a bell when it hits the bottom, so its business as usual.