Global investors are being urged to remain “cautious and consistent” despite fears over China’s economy triggering a global markets crash.
The message from Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory organisations, comes as yesterday is dubbed ‘Black Monday’ due to sliding stock markets worldwide.
Mr Green comments: “Investors must, of course, be vigilant of the Black Monday events and what has led to them. They need to ensure that their portfolios are properly diversified by geography, industrial sector and asset class in order to manage risk and navigate the growing volatility.
“If their portfolio is indeed well-diversified, for the time being at least I would urge investors to remain cautious and consistent.”
He continues: “In terms of what investors should do, it is not ‘sell in a panic’, or the opposite reaction: ‘fill your boots with bargains’. For most long-term investors, it is ‘keep calm and carry on’.
“However, stock markets can be fairly predictable over long periods of time. They tend, over time, to go up over multi-year time periods. With this in mind, a sensible strategy is dollar cost averaging.
“Investors need to ask themselves ‘will stock markets be higher than this when I retire? Looking at financial market history, the answer is probably ‘yes’, if they have a decade or more ahead of them. So, logically they should carry on buying as markets fall.”
The deVere CEO concludes: “It is often said that the key to investment success is to buy low and sell high. The only problem with that theory is that trying to accurately time the weakest point in the cycle is impossible.
“As such, it is best to just feed the money in over time in a measured way in order to take advantage of the long-term trend of stock markets to deliver long-term capital growth.
“History teaches us that panic-selling in stock market crashes can be potentially financially disastrous for investors.”