It's time to tune out the market noise and focus on your portfolio
Market noise has been at maximum volume over recent months. Constant updates regarding a highly fluid global trade war, wider geopolitical risks including conflict in various regions and rapidly evolving economic news may understandably have left many stock market investors feeling somewhat dazed.
In Questor's view, it is imperative to keep abreast of developments but not allow news flow to dominate investment decisions. Otherwise, investors may find they continually switch between a bullish and bearish mindset that leaves them struggling to determine exactly what course of action to take when seeking to generate a high return on their capital.
Indeed, the stock market's track record shows it has always ultimately recovered from even its very worst downturns. Long-term investors, therefore, should not give too much credence to market noise – even when it is painfully loud.
Rather, they should periodically seek to gain perspective on their portfolio's prospects by considering whether they are still invested in the right assets, geographies, sectors and, crucially, the most attractive companies.
For example, this column firmly believes that equities offer a relatively attractive risk/reward opportunity at present. Sticky inflation is likely to dissipate over the medium term so that price rises consistently equal central bank targets across developed economies. This should allow policymakers to implement further monetary policy easing.
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