You would be forgiven for asking if you can get off the rollercoaster that is the share market in 2022. Share markets locally and overseas have pulled back again over the past week. There is continued pressure due to inflation, rising interest rates & bond yields and the rising risk of recession. These factors could hurt company profits, hence the volatility we are seeing investment markets.
At times like this, Shane Oliver, Head of Investment Strategy & Chief Economist at AMP, reminds us that there are 7 key messages that investors should keep in mind:
- Share market pullbacks are healthy and normal – their volatility is the price we pay for the higher returns they provide over the long term;
- It’s very hard to time market moves so the key is to stick to an appropriate long-term investment strategy;
- Selling shares after a fall locks in a loss;
- Share pullbacks provide opportunities for investors to buy them more cheaply;
- Shares invariably bottom with maximum bearishness;
- Australian shares still offer an attractive income (or cash) flow relative to bank deposits; and
- To avoid getting thrown off a long-term strategy – it’s best to turn down the noise around all the negative news flow.
To read more on Shane’s thoughts: check out the latest addition of Oliver’s Insights
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