the pullback in shares – seven things investors need to keep in mind
Introduction
Every so often shares go through rough patches. We saw this most recently around February on the back of US inflation and interest rate concerns and the start of US tariffs which saw US shares and global shares fall roughly 10% and Australian shares fall 6%. Shares mostly recovered – even getting through the seasonally weak months of August and September surprisingly well – with US shares making new records and Australian shares hitting a ten-year high, but the worry list has returned again with US, global shares and Australian share now down around 7% from their recent high. This note looks at the issues for investors and put the falls into context.
Key Points
- The current pullback in shares has been triggered by a range of things – but most notably worries about rising US interest rates and the US/China conflict.
- Shares may still have more downside, but we are of the view that it’s just another correction.
- Key things for investors to bear in mind are that: corrections are normal; in the absence of recession, a deep bear market is unlikely; selling shares after a fall locks in a loss; share pullbacks provide opportunities for investors to buy them ore cheaply; while shares may have fallen, dividends haven’t; and finally, to avoid getting thrown off a long-term investment strategy it’s best to turn down the noise during times like this.
Read the full Financial Snapshot from Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital.
If you have any questions or concerns about the recent market fluctuations, please contact us.
