What should investors do when the stock market is in “turmoil” and recession looms?

On Wednesday 14 August 2019, the US stock marker suffered its biggest one day fall since October and the Dow Jones had its sixth worst day in history. Markets recovered by the end of the week when President Trump deferred a tariff increase on Chinese imports.

As markets reel and recession appears to be around the corner, The Times interviewed leading experts and economists working for fund managers or insurance companies. These are the people who control billions of pounds worth of investments on behalf of millions of savers and investors in pooled managed funds, from pension funds to unit trusts (mutual funds).

Not one expert recommended getting out of the market, even though some admitted that the price of shares could fall.

Helena Morrisey of Legal and General advised investors to “stay calm”, which is always easier when it’s not your money at risk?

She continued:

“Private investors should resist the temptation to cash in their portfolios. By selling in anticipation of possible losses, investors may miss out on the gains that often follow declines in share prices”.

In this volatile market, what would you rather do: miss out on a potential gain, or avoid a potential loss? I know which option I’d choose.

James Thomson, the manager of the Rathbone Global Opportunities Fund, astonishingly says:

“I will be sticking with my long-term strategy and not be distracted by market turmoil. I will be using and market dips to top-up some of the positions in my portfolio”.

This is bullshit.

Who do they think they’re kidding?

Naturally, they want you to “stay invested” in their funds, because that’s how they get paid – they earn billions from management fees and fund charges on your money.

My advice is simple.

Firstly, take independent financial advice if your adviser tells you to “stay calm” and “stay invested”, find another adviser.

Secondly, take a course and learn how to invest in the stock market yourself, or invest in something else you understand, rather than leaving it to highly-paid fund managers, most of whom do not even beat the market average.

If you would like to learn more about investing in your spare time, email me at charles@charleskelly.net or message me on our Money Tips Facebook Community

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