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Insight - Falling share markets

While market downturns are generally unpleasant for investors, they are to be expected as uncertainty will never disappear from any financial market. And it certainly helps to be prepared.

Rather than reacting to bouts of volatility and trying to understand the facts after a market has fallen, we believe it makes much more sense to assess a broad scope of possible outcomes before they happen.

We do this by focusing on current and forward-looking market fundamentals and investing in a framework that embraces uncertainty with appropriate and responsible strategies such as asset diversification and taking a longer investment term view.

The decline in global share prices – around 6% for the last month - and the escalation in market volatility illustrates just how fragile markets can be. As with many previous bouts of volatility, contributing factors include share prices running ahead of company earnings, however it’s only one of many factors which have led to the current market volatility. Interestingly although the market fall seemed significant markets are still improved dramatically since 1/1/2010. Maybe things aren’t so bad after all!

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