COPIERS AND FOLLOWERS UPDATE
Hi everyone, this is just a quick post from me to reassure you more than anything else, as at present the markets are very volatile and have been selling off almost since the start of the year.
First of all this is a very normal event for stock markets, with corrections and falls being part of the norm of any equity investor. As predicted, the tech and growth sectors have been hit the hardest, with a ramped up interest rate rise and quantitative tightening hints from the Fed spooking the Nasdaq especially, which is now in correction territory having fallen over 10% from its peak.
Our portfolio, although not in anyway immune from market volatility, has fared a lot better than most of the major indices this year. Although it is tough seeing lots of red flashing on the screens there is still very much the thought (both from me and most other analysts) that equities remain the place to be for this year.
Firstly, real yields from Bonds (i.e. interest payments once inflation has been taken into account) are still very much negative and it is widely regarded that stocks are the best place to protect cash from being eroded by inflation. Although little comfort at present whilst the markets are taking a hit, it is reasonable to assume that prices will recover in the not too distant future once volatility has dampened down.
Another factor that is spooking the markets at present is the threat from Russia to Ukraine, another episode which will hopefully calm down once everyone takes a deep breath.
A last factor to consider is that not one sector has escaped from this round of market drops and this is really due to investors selling positions regardless of how strong a companies' earnings are or how well suited it is to the current economic environment. For those of you who like the jargon that goes with economics, this is known is correlation compression. Once fear has been dampened down factors like economic reports and earnings will once again come to be the driver in stock market growth.
In the meantime the best thing to do is to sit tight and ride out this current bout of jitters and, as always, the stock market will recover and continue on its path upwards. Once again thanks go to each and every one of you for your patience and I will be in touch very soon again once there is more news and updates to bring you.
Best wishes, Richard.... Show More