Markets are crashing. Everywhere we look news reports are showing stressed traders in front of screens full of red numbers, while headlines hammer home the bad news from China… Greece… US manufacturing. What are we to think of it? More importantly, what are we to do about it?
First, stay calm.
Life will go on, and the sun will rise again tomorrow morning. The more breathless reports will tell us that ‘£X billion were wiped off markets’, or that ‘commodities are crashing’. Of course, it’s all true – but, actually, it might not matter. In fact, so-called corrections (when markets fall by at least 10% from their peak) are, for long-term investors, a heaven-sent opportunity to buy into quality investments that are now much cheaper than they were a few months or even weeks ago.
Warren Buffett, the legendary US investor, counsels greed when others are fearful, and fear when others are greedy. Today, like every day, markets are driven by a balance between those emotions and just now fear is winning out. It takes some courage, but when all around you are losing their heads, it is a terrific time to step forward and do the opposite. So we are buying into markets on the current weakness – it isn’t easy and it is obviously possible that markets will continue to be very volatile, and perhaps that today’s investments could fall further. But we are driven by long-term perspectives and that is why, for most of us, doing the opposite to the herd is often a great idea.
The outlook for the global economy, and the ‘developed markets’ (The US, UK, Europe) is good.
We don’t know when the current turmoil will end, and we don’t know what the next few weeks will be like. But if you are saving for the future, the opportunities to buy into markets at levels that are much cheaper than they were is one to take advantage of. We think smart investors will want to add to positions in UK, European and US equities, and we have all of these opportunities represented in both active and passive format on our White List. We think that the current weakness, across all asset classes, means that these products are particularly attractive.