News Archive - September 2011
Tricky to call
18/09/2011
The stock markets of the world are still fluctuating wildly from day to day. There are a few factors, as yet unresolved, which are causing this. The big question is whether the US, Europe and by implication the rest of the developed world are likely to tip back into recession.
If you are a long term investor, then these daily fluctuations have a limited effect. In fact, for people who save on a monthly basis, volatility can actually boost the final value of your investment via ‘pound cost averaging’.
For people committing money in the shorter term, it can be hard to make the decision to commit to the stock market when values are falling and rising so freely. In hindsight, it is often the times of most uncertainty that are the best ones to invest, but it is very hard to overcome ones natural desire for security.
There are definitely some companies that will continue to thrive – if you invest in them you will benefit from growth in excess of the current low bank rates, plus a future stream of dividend income. The difficulty is in choosing the right ones!
This is why I still favour investment funds that are actively managed and where the managers pick companies to invest in, rather than index tracking funds, which simply aim to follow the general stock market trend. An active manager can use discretion to avoid sectors (eg banking) which they feel are unattractive at the time.
If you want investment advice, please call Mulberry Financial and we will be able to explain the options for you.