A rough start to the year…seven reasons not to get too concerned though
Shane Oliver, Head of Investment Strategy and Chief Economist.
The attached note looks at the poor start to the year in financial markets.
Key points are as follows:
- Financial markets have started the year on a rough note as last year’s worries about China and global growth in the face of US monetary tightening continue.
- This could drive more short term weakness. However, in the absence of US/global recession, which still seems unlikely, it’s hard to see a GFC style bear market.
The key for investors is to recognise that shares offer a higher return potential after sharp falls, selling after big declines just locks in a loss and that dividend income from a well-diversified portfolio is little affected by share market volatility.