Investment Strategy

How Professional Investors Manage Turbulence in the Financial Markets

How Professional Investors Manage Turbulence in the Financial Markets
Stay the course

People are worried right now about their Investments.

The most important fact to remember about your investments, whether in real estate or stocks, is there are always a buyer and a seller. BUT, fear and greed come into play.

When I joined the financial industry in 1986, the markets were in good shape. In 1987 we encountered “Black Monday”, a downturn on the markets. The Dow Jones index (a measure of market health) lost 40%. Depending when you placed investments in quality portfolios such as Templeton Growth Fund, you would have recovered your share price in 18 months. Professional Investors buy when share price costs are down. We call that value investing, which has shown historically to be an intelligent investor.

My favourite portfolio manager at that time was John Templeton who prophesized that within 10 years the Dow Jones index would reach 10,000 from a low of 1,700. He foresaw the future of the investments industry. His prediction came about in March of 1997 when it reached 10,645.49.

History shows in 1929 the financial markets were overbought and a correction was needed, that caused the Great Depression. It took 10 years for some to recover. Market fluctuation in 1987 was due to speculation, euphoria and computer trading raising the share prices higher and higher. Global value of the US dollar being unstable caused rapid computer selloffs worldwide. We saw March to October 2008 as another blip on the financial markets, this due to non bailout for US Mortgage providers and banks by the US Government. The United States was in financial crisis. The average correction was 4 years. But let’s remember the upswing rises higher than the last high. And, if you had an opportunity to buy more shares at the lowest price, they too shall rise in value.

Today we are seeing market activity again. It’s been a worldwide pandemic health issue and survival by all countries, the over valuing of stocks and the unforeseen timeframe for recovery. I have a feeling that this will start to rebound when we hear positive comments from our leadership in the recovery process worldwide

Don’t panic, you incur no losses unless you sell. Stay the course, if you can, purchase more shares at this time, increasing your number of units (shares) in the long run, why not take the opportunity to purchase them at a lower price. We all run to purchase bargins!!!

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