• Home
  • You
  • Us
    • Services
    • One Island
  • Insights
    • Investing
    • Pensions & Retirement Planning
    • Financial Planning & Organisation
    • Moving from UK to IOM
    • Scam awareness
  • Podcasts
  • Contact

Call us on 01624 660220

mail@thorntonfs.com
Client login
Thornton Chartered Financial PlannersThornton Chartered Financial Planners
Thornton Chartered Financial PlannersThornton Chartered Financial Planners
  • Home
  • You
  • Us
    • Services
    • One Island
  • Insights
    • Investing
    • Pensions & Retirement Planning
    • Financial Planning & Organisation
    • Moving from UK to IOM
    • Scam awareness
  • Podcasts
  • Contact
4 questions asked when financial markets fall

4 questions asked when financial markets fall

16/03/2022 Posted by John Condon Investing

If some of these thoughts have been running through your mind during the recent stock market falls, it is perfectly understandable, and I hope this helps:

1 – What does this mean for my investment portfolio?

After seeing solid returns from investments in 2021, it can be not easy to handle seeing things take a turn the other way. It’s essential to remember that most investment portfolios aren’t exposed to the full extremes of stock market downturns.

It’s also worth a reminder of what the stock market is:

-companies
-managed by brilliant people
-pursuing rational business objectives
-measured by the value of earnings and cash flows.

Therefore, the stock market is a collection of the greatest companies in the world. Our client portfolios generally contain a blend of these “stocks” and less volatile assets such as government bonds, which aim to cushion the full extent of stock market falls when they come along.

You, therefore, own a part of the stock market within your portfolio. The proportion that this “part” amounts to for you depends on your attitude to risk and your goals.  Our planning for clients is about finding the right balance between downside protection and potential long-term growth.

2 – Markets have fallen recently – when will they recover?

I would love to know and tell you exactly when, but I can’t.

Nobody can predict short term stock market movements, as they are based mainly on unpredictable events.

What we do know is that after the stock market falls over the last 100 + years, in the long term, the markets as a whole have recovered and prospered. This lesson from history is the key; we need to look to the long term; there are no shortcuts with investing.

3 – Is selling everything down into cash a viable option when markets get scary? 

We sometimes get asked whether to sell everything down to cash when things get ugly and then buy back in when things appear a little calmer. This strategy sounds entirely sensible, at least in theory.

But, in reality, it’s impossible to do. You would have to get two calls consistently right.

The first call is getting out at the right time – the second is getting back in at the right time. Unfortunately, no green light flashes for the precise time you should do this!

And you need to do this every time there’s a sign of trouble in the world. Trouble never has been and never will be hard to find in the world.

We believe that this is a pretty sure-fire way to destroy your wealth over time, regardless of how comforting such a strategy may appear during times such as these.

Is selling everything down into cash a viable option when markets get scary? 

4 – Is there anything I should do or change?

Our advice to our clients is to:

tune out the “noise” in the financial press and keep as calm as you can

remind yourself that sensible investing is a long-term thing, which has been proven to work with patience, discipline and by sticking to a plan

also, you will have been advised by us to keep a strong cash buffer based on your lifestyle expenditure and our agreed cashflow forecast for times like this when storms need to be weathered

Remember that, as a Thornton client, you have a well-diversified portfolio, with your eggs in hundreds of different baskets – and as I said before, you hold “part” of the stock market in your portfolio.

As Sharon commented in her article last week, please don’t be surprised right now if we tell you “to do nothing”.

At times of crisis, we’re generally wired to want to change things, to react, to make us feel that we are being proactive and “dealing” with the situation.
But unless your personal circumstances have fundamentally changed, keeping calm and doing nothing is almost certain to be our advice right now to you to keep you on the right path.

I hope this has helped. If you’ve got any concerns or questions about anything, we’re here for you – get in touch today.

Share
0

About John Condon

John is a Chartered Financial Planner. He joined Thornton at the beginning of 2016 and is an integral part of the team which includes chairing our investment committee.

Contact Us

We're currently offline. Send us an email and we'll get back to you, asap.

Send Message
Finding the balance between today and tomorrow Let's talk
Thornton Associates Logo Transparent
  • Thornton Chartered Financial Planners
  • St. John’s Mill, Isle of Man, IM4 3AF
  • 01624 660220
  • mail@thorntonfs.com

Client login

Registered office: The Elms, Westmead, Glen Vine, Isle of Man. Company number 101131C
Licensed by the Isle of Man Financial Services Authority, number 1283
Thornton Chartered Financial Planners is the registered business name of Thornton Associates Ltd.

Proud member of Isle of Man Chamber of Commerce

Latest News

How about buying a Holiday Home to give you a Good Return on Life?

How about buying a Holiday Home to give you a Good Return on Life?

25/01/2023

As one who sold our holiday home last year, I can help you...

Business Consultant, Shelley Langan-Newton, Island Influencer

Business Consultant, Shelley Langan-Newton, Island Influencer

18/01/2023

This week’s Island Influencer Shelley Langan-Newton grew...

How to Get the Best Life Even When Couples Retire at Different Times

How to Get the Best Life Even When Couples Retire at Different Times

11/01/2023

Many couples don’t always plot retirement on the same date...

Kind words

  • We found the lifetime projections very useful in terms of knowing what we have and haven’t got and how to organise ourselves well into the future.

    Sam & Betty McBurney

Get our free email newsletter

 

Chartered Financial Planners

Our Chartered status is your guarantee of a higher level of expertise in personal and business financial advice, as it requires us to be held to prestigious standards set out by the Personal Finance Society.

© 2023 · Thornton Associates Ltd | Privacy Policy | Site by Bear Content

Prev Next