When faced with market downturns, investors should ride out the storm and remain committed to their long-term investment strategy, says FinaMetrica.
Risk profiling company FinaMetrica said when share markets fall investors should avoid “panic selling” and "knee-jerk reactions" that could degrade their wealth overtime.
FinaMetrica co-founder and director Paul Resnik said: “In times like these when markets are selling off, risk-averse investors often become overwhelmed by anxiety and sell down shares out of their portfolio – to their loss over the long run.
“Specifically, risk intolerant investors cash-out of companies that haven't dropped greatly but hold on to the ones who have taken the biggest falls hoping for them to recover. History shows that these are often decisions they, and their portfolios, later regret,” Mr Resnik said.
FinaMetrica reinforced the importance of diversification. While most market commentary focuses on “dramatic” price declines, investors with a well-diversified portfolio will experience less volatility than what is reported in the media, the company said.
“The volatility in their portfolios will be very different, and much less violent than the particular shares or asset classes reported in the news,” FinaMetrica said.
The company also warned investors against reading newspaper headlines before executing a trade.
“If you feel you must trade, don't read the newspaper headlines screaming market devastation and historical drops, or fantastic buying opportunities for 48 hours before you act.”
New research has found the consequences that fees can have on an investment and how higher fees do not necessarily correlate with performanc...
A new fund based on a long-running strategy from asset manager Insight Investment has been added to the Macquarie Wrap platform. ...
The Australian ETF industry continued its strong growth trajectory, reaching a record high of $42.29 billion in FUM in September, according ...