Home' NZMJ Digest : NZMJ Digest Issue 83 Contents FEATURE
Unemployment in the US continues towards multi-decade lows, which is
great for Americans as it demonstrates their economy is growing strongly
although investors now (since end of September!) perceive this is counter-
balanced by increased wage growth which promotes inflation concerns.
The “Trade Wars” are also a point of concern and increasing along with
Trump rhetoric – particularly with China, but also Canada, Mexico and
While the latest US earnings reporting season was good – markets
were expecting a lot more. This is where the other side of the investment
coin - the GREED factor has come in to play. While 8 in 10 US companies
reported better than expected earnings, 75% of these companies experi-
enced a decline in share value on the day they reported...... investors were
expecting even higher earnings.
Global share markets have recovered over this first week of November
and the general feeling out there seems to be that the mayhem that was
October was a long-overdue correction, rather than the beginning of a bear
(sustained period of decline) market. This is based on the view that “Red
October” came out of nowhere whereas bear markets usually roll out more
While October tested some investors’ fortitude, if you “own” a
well-structured financial plan that allocates funds depending on when you
are likely to use them and which are aligned to your risk tolerance, then
you should not be feeling the least concerned. Indeed if you are regu-
larly saving for your future (just like your KiwiSaver account) any dips in
market values provide an excellent opportunity to buy the same assets that
were valued more highly just days before......at discounted prices.
It is worth noting that “timing” the market for lump sum investing is
almost impossible to scientifically get right. Whatever stories you read of
success at buying in on lows with exponential returns soon following as
assets recover and grow.....put this down to what it normally is.......luck. If
analysts and experts had the ability to accurately advise us when best to
invest, we would all be rich and investing would be easy – it is not!
The pathway to investment success is to have a plan, stick to it, and
review this regularly and especially as circumstances change! This way
you will be able to view the next Red October (or whatever month/quarter/
year that the media headlines start) from the grandstand with surety and
comfort that entirely predictable short term events are not destabilising
your game plan. A very empowering position that is achievable with fore-
thought, dedication and maybe a bit of good advice (we are here to help!)
along the way.
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