By Amanda Chadwick (Authorised Financial Adviser of Forsyth Barr Wellington)
The share market took a tumble (or was it more of a stumble?) last week. Headlines
warned that KiwiSaver accounts could halve in value. Was it just media hype?
What are the experts saying? To answer these questions, we approached Amanda
Chadwick of Forsyth Barr to comment on the wobbly market and how we should
Between October 5th and 11th 2018, global sharemarkets hit turbulence, with
the MSCI World index (in New Zealand dollar terms) falling 6.2%, the Standard &
Poor’s 500 index falling 6.7% and the NZX 50 index declining 5.4%. While the fall
occurred sharply, given the same three indices were up 19.6%, 27.0% and 15.0%
over the preceding 12 month period, Forsyth Barr did not consider the pullback
to be unexpected. By the time things had settled a week later, the same three
markets had rebounded by 1.0% to 2.0% of their initial fall. In some cases,
market volatility can provide an opportunity to invest in quality companies at
more favourable prices.
Market behaviour (as with everyday life) is a combination of reality mixed with
emotion. It is not unusual to see an initial dramatic reaction to market news or
events, often presuming the worst, rather than taking the time to understand the
cause or context of the situation. Human nature has a knack for focusing on
negative news and amplifying its impact through isolation, which is why it’s
valuable to have an Authorised Financial Adviser providing much needed
perspective and strategy. One of the first questions to answer in response to any
sudden market movement is “what’s the cause?”
When reflecting on last week’s correction, the main contributors to the sell-off
were largely a mixture of:
the United States Federal Reserve signalling potential interest rate rises;
continuing trade tensions between the United States and China.
Investors with their own investment portfolios, should seek advice from an
Authorised Financial Adviser they can have regular contact with, who provides
proactive updates and communication and is readily available to ‘chew the fat’ in
response to market events. An Authorised Financial Adviser’s real value is not
just managing a portfolio to generate returns, but in navigating the client’s
investment experience. It’s important to consider everything from personal life
goals and objectives, portfolio expectations, the economic landscape, and how to
position the portfolio at any given time, given both the client’s needs and risk
appetite (or lack of it), as well as the stage of the market cycle.
Amanda Chadwick is an Authorised Financial Adviser with Forsyth Barr Limited in
Wellington. For further information on any aspect of this article or to arrange a
meeting to discuss your investment objectives in confidence, call 0800 367 227 or
email firstname.lastname@example.org. This column is general in nature and is
not personalised investment advice. Disclosure Statements for Forsyth Barr
Authorised Financial Advisers are available on request and free of charge.