Strategies for weathering uncertain markets
Be informed: Understand market ups and downs
Understanding general stock market behaviour is an important factor for investing during good times as well as trying times, and in achieving long-term investment success. Stocks have historically proven to be a very good investment. This does not mean that every year will produce a double-digit, or even a positive, return. In other words, down periods such as those we are witnessing, as well as up, are natural parts of equity investing. Unpredictable events will have an impact on markets, sometimes negatively. However, it may not be beneficial to let the short-term declines distract you from your longterm goals or the long-term potential of stock market investing.
Be opportunistic: Take advantage of the downturns …
By viewing market declines as buying opportunities, you could significantly enhance your long-term return potential when the market rebounds. While no one can predict when markets will decline or rebound, some investors choose to add to holdings when markets are “on sale”. This strategy may still prove risky and incur additional losses, but adding to holdings or looking to diversify when markets are cheaper may provide significant advantages versus a strategy of pulling out of the market near the bottom.
Be invested: Keep your money working for you
Over every market cycle, there will be up days and down days. Missing even a few of the stock market’s best-performing days can result in significantly lower returns than the market index. Often, a few very good days account for a large part of the market’s total return. By trying to time the market and potentially getting this wrong by even a small margin, you may potentially miss out on market rallies that can substantially improve your overall return and long-term wealth.
Be diversified: Reduce volatility and enhance returns
Rather than trying to pick a single investment type, diversifying across asset classes may help to decrease your risk and enhance long-term return potential. Not all investment types perform the same during similar time periods. Investing across multiple asset classes, styles, sectors and regions reduces risk and enhances the potential for being invested in the best-performing asset and diminishes the impact of being invested in the worst.
This strategy may be especially important in a difficult market environment when sector rotations and market fluctuations happen continuously. Diversification may reduce the overall volatility of your entire portfolio while helping you achieve above-average long-term returns
Be confident: Stay focused on your investment objectives
Investors have seen a number of shocks and disruptions to global financial markets caused by both political and economic factors, and markets may react dramatically in response to specific events. While investors may see the market react dramatically to adverse events, they should be far more influenced by their long-term goals. Maintaining a clear focus on your investment objectives during difficult times is often a determining factor in long-term success. Seasoned investors know that, in the long run, markets have shown remarkable resiliency in times of crisis. Investors who are informed, invested, resolute, opportunistic and diversified can have a greater degree of confidence that their investment goals can be met.
Let professional investors do the hard work
History has shown that markets can be volatile, but you do not have to navigate these challenging times alone. BlackRock has the experience, insight, global resources and investments to help you stay the course and meet your financial goals. Through our strengths in the areas of investment excellence, global reach, risk management, intellectual leadership and service—as well as our partnership with your Financial Adviser—you can feel confident that your assets are being managed by some of the most experienced and best prepared investment professionals in the industry.
Understanding general stock market behaviour is an important factor for investing during good times as well as trying times, and in achieving long-term investment success. Stocks have historically proven to be a very good investment. This does not mean that every year will produce a double-digit, or even a positive, return. In other words, down periods such as those we are witnessing, as well as up, are natural parts of equity investing. Unpredictable events will have an impact on markets, sometimes negatively. However, it may not be beneficial to let the short-term declines distract you from your longterm goals or the long-term potential of stock market investing.
Be opportunistic: Take advantage of the downturns …
By viewing market declines as buying opportunities, you could significantly enhance your long-term return potential when the market rebounds. While no one can predict when markets will decline or rebound, some investors choose to add to holdings when markets are “on sale”. This strategy may still prove risky and incur additional losses, but adding to holdings or looking to diversify when markets are cheaper may provide significant advantages versus a strategy of pulling out of the market near the bottom.
Be invested: Keep your money working for you
Over every market cycle, there will be up days and down days. Missing even a few of the stock market’s best-performing days can result in significantly lower returns than the market index. Often, a few very good days account for a large part of the market’s total return. By trying to time the market and potentially getting this wrong by even a small margin, you may potentially miss out on market rallies that can substantially improve your overall return and long-term wealth.
Be diversified: Reduce volatility and enhance returns
Rather than trying to pick a single investment type, diversifying across asset classes may help to decrease your risk and enhance long-term return potential. Not all investment types perform the same during similar time periods. Investing across multiple asset classes, styles, sectors and regions reduces risk and enhances the potential for being invested in the best-performing asset and diminishes the impact of being invested in the worst.
This strategy may be especially important in a difficult market environment when sector rotations and market fluctuations happen continuously. Diversification may reduce the overall volatility of your entire portfolio while helping you achieve above-average long-term returns
Be confident: Stay focused on your investment objectives
Investors have seen a number of shocks and disruptions to global financial markets caused by both political and economic factors, and markets may react dramatically in response to specific events. While investors may see the market react dramatically to adverse events, they should be far more influenced by their long-term goals. Maintaining a clear focus on your investment objectives during difficult times is often a determining factor in long-term success. Seasoned investors know that, in the long run, markets have shown remarkable resiliency in times of crisis. Investors who are informed, invested, resolute, opportunistic and diversified can have a greater degree of confidence that their investment goals can be met.
Let professional investors do the hard work
History has shown that markets can be volatile, but you do not have to navigate these challenging times alone. BlackRock has the experience, insight, global resources and investments to help you stay the course and meet your financial goals. Through our strengths in the areas of investment excellence, global reach, risk management, intellectual leadership and service—as well as our partnership with your Financial Adviser—you can feel confident that your assets are being managed by some of the most experienced and best prepared investment professionals in the industry.
BlackRock is one of the world’s preeminent asset management firms and a premier provider of global investment management, risk management and advisory services to institutional, intermediary and individual investors around the world. This advice is of no further application and does not represent a general explanation of the issues or a full review of the subjects covered. The advice should not be relied upon in any other context by any person. Professional advice should always be sought before any action is considered based on the above and no liability is accepted by Blackrock, Capital Growth Solutions Ltd or any of its partners consultants or employees in respect of any action which might be taken or refrained from being taken by any person as a result of the contents hereof.
