After a strong 2017 which saw markets rise every month, the volatility currently being experienced is not unexpected.
Previously some commentators had been calling a “melt up” in equity prices, where prices rise for for no reason other than prices are rising, more recently other commentators have mooted the possibility of a 1987-style market crash.
Antony Barton IFA, said: “After a rapid recovery in share prices following February’s sell off, it is inevitable that investors will be taking time to pause for breath and reflect”.
We take a look at three ways to cope with a mature bull market.
- Don’t be greedy
After a bear market investors want to capture as much of the upside as possible, however, we are now in a different place. Valuations have been a little more stretched and at this point in the cycle investors should be willing to leave some return on the table. In other words, don’t keep chasing the growth stocks.
- Be diversified
With cash rates still so low investors cannot afford to sit out this stage of the market cycle. We suggest spreading risk across a range of return sources; such as diversifying into currency strategies within portfolios, looking for equities that have lagged the market.
- Plan your exit
Investment managers will be identifying the triggers of a shift in direction. Most indicators are still showing a benign environment, but a shift to the slowdown phase of the economic cycle would prompt a shift to a more defensive strategy.
Our client portfolios are currently positioned with all of this in mind and managed on a day to day basis by teams of full time professionals. “It is still widely expected by analysts that we will end 2018 higher than we started” says Antony Barton, “but the road will be a little more bumpy…”.
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