2018 is ending with an unsettled market, reflecting the uncertainty springing from Brexit and continuing turbulence in the White House, which includes a government shut down and concerns that President Trump wants to fire US Federal Reserve chairman, Jerome Powell.
Stocks and Politics
Politics and weaker global trade have all contributed to a fall in stocks – the S&P 500 has dropped 19.7 percent since September, and stocks fell for four days in a row before Christmas. It seems we might be in for a subdued 2019.
But the market has been ever thus – sensitive to a range of factors. When the going gets unpredictable, it’s time to take a deep breath and look to the old, wise hands-on how to “keep your head when all about you are losing theirs”.
As commentators speculate that we’re at the end of a ten-year bull market, it’s good to keep in mind the words of John Templeton, who said “The only reason to sell them a stock now is to buy other, more attractive stocks. If you can’t find more attractive stocks, hold on to what you have.”
Here’s The Advice
Edgier advice can be found in the words of Baron Rothschild, who said: “Buy when there’s blood in the streets, even if the blood is your own.” This contrarian advice followed the packet he made while buying up during the post-Battle of Waterloo panic in the 18th century.
More contemporary financial wizards emphasise the importance of patience and holding your nerve for the long term in the face of volatility. Volatility, as Warren Buffett reminds us, is both very normal for the stock market and entirely unpredictable in the short term. However, over long periods – think in decades – the market reliably goes up, even smoothing out the losses from some of the biggest crashes in history.
As US hedge fund manager Seth Klarman says, “The single greatest edge an investor can have is a long-term orientation.”
Warren Buffet, always cool in a crisis, gets the last word: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
If you would like to speak with a professional investment adviser about how your portfolio is positioned for the year ahead, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation.