Retail investors may be suffering in the current market turbulence but investors should be warned that leaving the market now may not be the best strategy.
According to Perennial Investors head of retail funds management Brian Thomas, research shows that in the past 19 years, you only had to miss the best 27 days of the share market to reduce your return to that of a cash return, showing that timing the markets is very difficult.
Is now the beginning of a prolonged bear market or was the January 22 correction the start of reasonable returns for the year? It's difficult to predict.
Morningstar's expert panel held its latest meeting at the end of last month and its unanimous view was that investors take off all tactical growth/income positions and revert to benchmark strategic allocations.
It was unable to forecast whether the US would slip into recession or even whether it had already slipped, however, it was sure investors were leaning towards the probability it might.
In Australia, the expert panel said although there was no obvious need to go defensive against the risk of further declines in growth assets, equally it felt there was no clear route to an aggressive stance. Thus it recommended a reduction in the local and global share weighting.
The recommendation to property was to remain at the benchmark. While there may be opportunities, the panel said apart from very selective buying it was too hard to make a justifiable tactical position for the sector.
So to make the worst of times the best of times, it is more important than ever to do your homework and stick to strategy not timing.
