Investors should not let the recent stock market bloodbath spook them into panic selling, according to Nigel Green, chief executive of the world’s largest international IFA deVere Group.
Green believes that many market commentators have overcooked the state of the global economy and are adding to the doubt in the minds of investors rather than helping them make sensible financial decisions.
He refuses to join the pessimists and offers four tips to investors:
- Don’t panic
- Buy shares that offer good value
- Diversify holdings across asset classes and regions
- Keep some cash in hand
“Regardless of the state of the stock markets at any one time, in the long term, stocks and shares have proven to create and grow wealth for investors,” said Green.
“Stock markets are fairly predictable over a long time.
Perception of fragility
“The global economy is growing around 3%, and whilst China’s economy – which is the focus of so much of the recent sell-offs – has slowed, there’s still growth, strong consumption, and indeed the world’s second-largest economy does look relatively stable.”
Green is not alone in his opinions.
Many financial experts and economists believe the problem is a perception of fragility in the markets rather than a move back towards recession.
Selling to stem losses is also considered generally a poor investment decision when prices are falling.
“Best advice is to put money into the markets when shares are cheaper,” said Green.
This when dollar/pound cost averaging comes into play, as losses on shares bought at higher prices even out against the cost of cheaper shares.
Concerns over oil prices and China GDP
In recent days, extreme volatility has hit stock markets, mainly due to the price of oil continuing to fall and the lowest GDP growth to come out of China for 25 years.
However, the price of oil has rallied and although GDP is slowing in China, the figures are still impressive against most other economies.
Experts like Green suggest economies with central banks likely to pump more cash in – such as the European single currency zone and Japan, as easing is likely to increase the price of assets.
“The world is not coming to an end and investors just need to hold their nerve,” said Green.
“The markets will sort themselves out, it’s just a matter of when.”
