Why 2018 gave investors a valuable lesson
The past year has been a learning experience for investors. It has been a long overdue reminder that putting money in the markets can result in losses as well as gains.
Don’t be down if your portfolio has taken a hit. Stay positive and remember that a long-term investing strategy will inevitably come with ups and downs.
The FTSE 100 is down nearly 12% this year and most other major markets around the world have also lost money for investors. The worst thing you can do now is sell and lock in losses.
You should continue to feed money into the markets, buying companies with strong balance sheets and funds run by proven experts. If you are particularly nervous and believe markets have further to fall then save up some cash and keep it to one side to make investments when you’re convinced everything is at peak gloominess.
FOCUS ON THE FUTURE
It certainly feels like there is already a lot of bad news being factored in at the moment. Investors should perhaps start to focus on what it would take for the markets to revert to their upward trajectory and to take stock of current events.
Many companies in the FTSE 100 index look cheap on an earnings basis and offer attractive dividend yields. The UK market has already underperformed and many of its companies have already completed, or are already going through, restructuring programmes to make them leaner and fitter for the future.
Expectations have already been downgraded for economic growth in many parts of the world, so even the smallest bit of positive economic data in 2019 could be good for the markets. So too a peaceful resolution to the US/China trade war, and some clarity of the direction of Brexit would certainly go down well with investors.
People like to know where things stand – good or bad – so they can formulate a plan to deal with it. Not having to use the word ‘uncertainty’ would certainly be my big wish for 2019.
This bumper issue of Shares contains lots of information to help you stay abreast of events, plus investment ideas going into the New Year.
We’d love to hear about any particularly topics you would like to us to cover in the future, so please email email@example.com with ‘article ideas’ in the subject line.
The next issue of the digital magazine will be out on Thursday 10 January 2019 and if you can’t wait that long there will be a regular stream of stories on our website over the Christmas and New Year period.
On that note, I would like to thank everyone for reading Shares, whether you are new to the publication or a longer-term follower. I hope you have a fantastic Christmas and I wish you all the best for 2019 and hope that it brings better news for your investments.