A Call for Calm in Uncertain Times…

For the time-being, it means journalists will have to look elsewhere for their next big headline.

With the recent French elections unearthing a new government focused on austerity and investing in the growth of Europe, this has brought into question the current European Union (EU) bailout measures for the region.

At the same time, elections were held in Greece and with no clear winner the Greeks will be forced back to the polls in early to mid-June. The concerning factor here is that others in line for the top job are opposed to Greece’s austerity measures; measures that will ensure they qualify for the further handouts. Failure to continue cost cutting would almost guarantee Greece’s departure from the EU.

On a local front, a minority Government obsessed with returning our country to surplus at any cost, and an opposition who states that ‘when’ they take over (not ‘if’), they plan to scrap the mining and carbon taxes, only serves to add fuel to the fire.

These issues create something markets despise – uncertainty.

The result of uncertainty tends to be volatility. Investors will jump at shadows and markets will likely react, both up and down.

Understandably, a common question asked by many clients and investors is:  “What should I do?”

At the expense of sounding like a broken record, here’s my advice:

• Try to ignore the noise made by the media as they will whip you into a frenzy at every swing and roundabout.
• Remember, timing the market is a dangerous game. Always take a long term view and remember that quality companies will always navigate their way through troubled waters and come through the storm stronger than before.
• If you are client of Hewison Private Wealth, your portfolio has been constructed for a purpose. Whether it is for capital growth, income generation, or both. Short term volatility does not impact the long term strategy. If you happen to be managing your wealth elsewhere, ensure you have the right strategy in place.
• Remember, asset allocation is the cornerstone of any strategy and re-balancing back to it is the key. A fall in the Australian share market may mean you are underweight in this area. It may mean perhaps there are some opportunities to purchase quality, undervalued companies.

Finally, if you remain nervous, I would encourage you to contact your adviser and talk to them about your personal position to ease any fears and ensure you remain on a steady course.