A relatively new client called last week and was clearly concerned about the state of the stock market, primarily resulting from political statements and announcements.
“Are my accounts going to go to zero?” – I gave the answer a simple answer of No.
But investors need to appreciate that accounts can go to zero. It’s possible depending on what you invest in.
Ask yourself the following questions.
- Are you investing in a single company, such as Apple or Vodaphone? Then Yes, it can happen if that single company investment reduces to nil.
- Are you investing in a volatile, high risk sector such as crypto currency? Then Yes, it can happen in this case too.
- Are you investing in a new tourist restaurant business that you’ve been told about by your mate down the pub? Definitely yes, losing your money is a probability.
- Are you investing in a variety of good quality companies across a variety of industries and countries? Then it is extremely unlikely your account would fall below your own accepted levels for your risk tolerance and volatility.
Whilst an investor should be reviewing overall asset allocation with the potential to ‘tweak’ here and there, it is unlikely that selling whole portfolios and moving to cash will create longer term client investment growth.
With stocks, an investor must take the downside to get the upside. We are in a general US equity downside period right now, and it doesn’t feel good, but stay with it because good companies will pay you back for staying with them.
But don’t just take my word for it. We would like to take this opportunity to invite PALS readers to an Aisa Group Seminar to meet some of our team European team. We have invited UK based investment managers Evelyn Partners to share their expertise and up to date global economic overview. We will be presenting on the interesting subject of psychology within investing. There will also be the latest news on the new incoming Cyprus Taxation changes and how it can affect you as an expatriate in Cyprus. Please join us for a stimulating and enlightening morning with complimentary refreshments before and after at Elea Estate on Wednesday 14th May at 10am. This is likely to be a well attended seminar so please reserve your space by contacting Avril at [email protected] or calling on 26 951 600.
