Periods of uncertainty are uncomfortable, but they are not new.
Geopolitical tension – including conflict in Iran, ongoing inflation in Australia, rising interest rates and volatile markets – all create noise that can easily drive emotional decisions. In these moments, the greatest risk is often not the market itself, but the decisions made in response to fear.
Attempting to time the market is one of the most common mistakes investors make and it is usually done poorly. Decisions to sell often occur after markets have already fallen, locking in losses and removing the opportunity to recover. Once markets have dropped, the best course of action, if your plan allows, is often to stay still and wait.
History provides a powerful reminder. In March 2020, at the height of Covid uncertainty, the ASX 200 fell to about 4800, fear was widespread and the outlook felt bleak. Yet by July 2020, the index had rebounded to around 6300. Today, it sits near 8600, despite recent volatility. At the time, those months felt like an eternity, but in hindsight they were a short chapter.
We do not have a crystal ball. Instead, focus on what you can control. Maintain adequate cash flow and liquidity, rebalance thoughtfully and stay disciplined. Staying informed is useful, but staying steady is essential. Speak with your financial adviser.
Mandy Newman, Director, AJN Financial, 15/13 Poinciana Avenue, Tewantin, 1300 55 90 70, ajnfinancial.com.au
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