Market Update – September 2015

Ask most investors and they will readily tell you that since the beginning of August our local share market has experienced some volatile movements (read ‘falls’) and once again questions are being asked about the ‘safety’ of share markets.

What is often ignored, arguably because ‘volatility’ carries such a negative connotation, is that volatility refers to movement in either direction. Markets can be positively volatile just as easily as they are negatively volatile. Most people would be aware that since 1 August the Australian ASX 200 has fallen 8.4% to the time of writing and at it’s worst had fallen 12.2% at 24 August. Those same people however may not be aware that the same index of Australia’s top 200 stocks rose in value by 11.87% for the similar six week period from 16 January until 27 February.

A combination of European debt issues, growing pains in China and concerns in the US about the timing of their own fiscal management strategy together with conflicting domestic markers including increases in retail sales and participation in the workforce around June and July being met with falls in capital expenditure in the private sector during the same period and for future periods all combine to at best, offset each other and at worst, result in uncertainty, which generally leads to a flight to safety by a sector of investors.

It is worth remembering that in the share market in particular, the sale of a single share will set the price of that stock at that moment. It is also worthwhile to consider that for that sale to be completed – someone needs to sell the stock and another party needs to buy it. Where one sees danger, another sees opportunity.

At Lifepath we don’t profess to be able to see the future and know where these events will finish. In fact, these events will not finish. There will always be change and consequently, volatility. We see our role as your investment strategists and partners as not being able to avoid volatility, but to build an investment strategy and philosophy which can provide for your requirements during difficult market periods and benefit from the positive volatility when those opportunities arise.

If you wish to review your strategy to ensure it remains relevant for you, call your adviser today.