{"id":398,"date":"2018-12-19T22:40:43","date_gmt":"2018-12-19T22:40:43","guid":{"rendered":"https:\/\/nestegginvestments.co.nz\/?p=398"},"modified":"2020-11-17T03:42:20","modified_gmt":"2020-11-17T03:42:20","slug":"equities-are-on-sale","status":"publish","type":"post","link":"https:\/\/nestegginvestments.co.nz\/index.php\/2018\/12\/19\/equities-are-on-sale\/","title":{"rendered":"Equities are on sale!"},"content":{"rendered":"\n
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Well, its been a wild ride for equity markets over the last quarter of the year.\u00a0 In fact, a bumpy downhill slide might be a better way of characterising what has happened.\u00a0 All major markets are significantly down over the quarter.\u00a0 As I write, the major market indices have fallen 7% for New Zealand, 12% for Australia, 11% for the UK, 14% for Japan and 13% for the US from their high points in September.<\/p>\n\n\n\n

I\u2019ve yet to come across an investor who enjoys seeing the value of their investment portfolio fall.\u00a0 But in fact, significant market corrections, the likes of which we are going through now, do represent good buying opportunities.\u00a0 A good way to look at it is that equity markets are currently \u201con sale\u201d, and it\u2019s a good time to get a bargain.<\/p>\n\n\n\n

This is where portfoilio rebalancing comes into its own.\u00a0 All investors should have defined an appropriate asset allocation based on their personal situation, financial objectives and risk profile. As an example, a \u201cbalanced\u201d investor, might have a benchmark portfolio of 50% growth assets (shares, property) and 50% defensive assets (fixed interest, cash).\u00a0 <\/p>\n\n\n\n

But now, with the market turmoil, that balanced investor may find that equities only account for 40% of their total portfolio.\u00a0 This is a strong signal to convert some fixed interest funds into equities, to return the weightings to 50\/50.<\/p>\n\n\n\n

This can be hard to execute.\u00a0If markets have fallen, it can feel very wrong to be buying.\u00a0 But it is the right strategy to maintain an appropriate risk profile (avoiding your portfolio becoming too risky or too conservative). And if done well it\u2019s a structured way of buying low and selling high, and can make a meaningful difference to your long term portfolio returns.\u00a0 \u00a0A note here that you should also rebalance when the opposite happens i.e. when equity markets surge ahead.\u00a0 This is a sell signal, to again return your portfolio to its benchmark asset allocation. <\/p>\n\n\n\n

Going forwards, there are a few global issues that might make markets jumpy in the short term: US\/China trade tensions, Brexit, rising US interest rates, etc.\u00a0 I encourage investors to keep a long term perspective, stay invested, don\u2019t get spooked by short term market volatility, but do look for opportunities to rebalance when the markets are having a sale.<\/p>\n\n\n\n

Happy holidays!<\/p>\n\n\n\n

Dean Edwards<\/p>\n","protected":false},"excerpt":{"rendered":"

Well, its been a wild ride for equity markets over the last quarter of the year.\u00a0 In fact, a bumpy downhill slide might be a better way of characterising what has happened.\u00a0 All major markets are significantly down over the… <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-398","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/398","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/comments?post=398"}],"version-history":[{"count":3,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/398\/revisions"}],"predecessor-version":[{"id":402,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/398\/revisions\/402"}],"wp:attachment":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/media?parent=398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/categories?post=398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/tags?post=398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}