This is our view of the markets given the current high levels of volatility.
Around March / April markets reached their peak and have since then declined around 5% during the Spring/Summer on the back of the Greek debt crisis. Markets lurched up or down 2-3% on a regular basis during this period.
The most recent bout of volatility in the markets concerns China’s potential slowing economy. China is obviously a big market for exporters around the world, so a slowdown will affect the profitability of Companies worldwide. However, economic activity in the UK, US and Europe is far from bleak and we feel that the latest fall, whilst not without some justification, has been exacerbated by investor sentiment.
Our view, particularly to those invested in cautious to balanced risk portfolios (where you do not feel the full impact of a stock market fall), is to sit tight and ride out the current market swings. Typically in the past we have seen large falls followed (within a reasonable time frame) by rapid rises in market values. Of course we cannot predict what will happen over the coming months, but our advice is not to panic and ride out the markets.