Investors warned of continued volatility
Share
Advisers have urged caution to investors who may view the market turmoil as a buying opportunity.
The market dipped back towards 5,000 yesterday after over a week of heavy falls and advisers are not ruling out more falls in the short term with no quick fix to the turmoil. The market has dropped by more than 10 per cent since August 9.
Hargreaves Lansdown head of research Mark Dampier (pictured) says the short-term effects are probably overdone but warns that, given the size of some of the issues facing the global economy, another 10 per cent fall is possible. He says: “Making an investment decision at this stage is too premature as the market volatility could continue for the next couple of weeks.”
Skerritt Consultants head of investment Andrew Merricks says the crisis has similarities with Japan in the mid to late 1980s. He says: “Japan had a banking crisis and a property crash, growth became negative or marginal and then it went into a slump. There are similarities but everyone assumes markets will hit a bottom and it will go back up again. But if we are in a Japan-style problem you can lose a huge chunk of value in the stock market and then it can go nowhere. That can happen in the US, in particular. This turmoil will be drawn out.”
Chelsea Financial Services managing director Darius McDermott says: “Over the long term there will be value in equities. I would focus on those sectors that have been hit hardest at the moment, like financials and miners, they are the ones that will feel the bounceback.”
Dampier says if he were to invest he would look at gold, emerging markets and Russia. As for the UK, he says: “I would stick with Neil Woodford’s Invesco Perpetual income and higher-income funds and Nick Train’s Lindsell Train global equity fund. The focus should be on the blue-chips.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
