A rough start to the year, which could have further to go. Seven reasons not to get too concerned though:
Key points
- Financial markets have started the year on a rough note as last year’s worries about China and global growth in the face of US monetary tightening continue.
- This could drive more short term weakness. However, in the absence of US/global recession, which still seems unlikely, it’s hard to see a GFC style bear market.
- The key for investors is to recognise that shares offer a higher return potential after sharp falls, selling after big declines just locks in a loss and that dividend income from a well-diversified portfolio is little affected by share market volatility.
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