Markets
Markets crisis: How to play it
Joe McGrath, 19 August 2011
What Investment editor Joe McGrath gives his views on how to navigate the panic currently gripping the global markets.
Hopefully, you will forgive me for resisting the urge to fuel the fire from the ongoing market turbulence, but I think the last thing we need is someone else crowing on about the end of days.
Personally, I believe sitting in defensive positions now is a mistake for those buying in for the longer term as there is a real opportunity for investors in Western markets and don’t get me wrong, the problems that we face are severe.
Yes, significant growth in the US economy is a long way off due to their reluctance to take an early dose of medicine to right their wrongs.
And, the continued “mañana, mañana” attitude of the Eurozone leaders is a worry, although, to be frank, there is increasingly little evidence of their leadership in this latest episode of the economic crisis.
But despite all of this there are bargains to be had for those longer term investors who can buy in now at lows not seen since the credit crisis began and hold their positions (and their nerves) for a good few years.
A good friend of mine was among a group of bankers who invested a large percentage of their personal wealth in higher quality UK banking stocks during the sub-prime mortgage crisis when financial stocks were obliterated.
During the chaos, which claimed the likes of Bradford & Bingley and Northern Rock from our high street and triggered the subsequent part nationalisation of RBS and Lloyds Banking Group, these people took a methodical approach and bought in.
As it turned out, they didn’t have to wait too long before they were able to cash in their shares and double their money.
This may seem like common sense to seasoned investors, but I remain surprised at the number of generalist personal finance commentators who are obviously dining out on recent market activity to make headlines.
Of course, this is a tricky period with investment and pension portfolios inevitably hard hit in the short term, but readers of What Investment have always been able to spot investment opportunities over the longer term (looking ahead between five and seven years).
Our research over the past month has highlighted many opportunities available, from income buys to the very much fancied mid cap sector and I just hope that readers take our messages of caution in the spirit intended.
To conclude, I’m not saying that people should be gung ho about their investment strategies in the current market and pile into any UK fund or stock willy-nilly, but a calculated and streetwise approach could serve you very well indeed, so do your research and grasp the nettle.
Advertisement
Free Magazine: How To Invest For Income
Free Magazine: How To Invest For Income In this free edition of MarketViews, Peter Temple highlights key features that can make income-based investing generate such good results. Get your free copy here
Free Guide: 8 Common Trading Indicators
Get this free guide to find out how to use technical indicators to give you a sense of what the market will do next. Get your free copy here.
No hassle and no admin fees. Open an account now with The Share Centre. Find out more.
A free guide to Gold Investment
Physical Gold protects against global economic downturn by providing crucial portfolio balance. You can buy gold bars for your UK pension and receive up to 40% price discount via tax relief. Buy tax-free gold coins as an alternative to poor interest rates. Find out more and download this free guide to gold investment.
The TaxGuide.co.uk has a wealth of tips and advice from working out your tax bill, through to the latest personal tax rules. Get your personal tax tips today.
FREE Report: Inside Investment Trusts
Written by the team behind What Investment, this exclusive FREE report covers:
- Why Investment Trusts are better than Unit Trusts
- How new legislation is broadening the appeal of Investment Trusts
- Where to look for buying opportunities
- Why now is the time to buy Investment Trusts
- The Investment Trusts to invest in at the moment


Comments
Please register or login to comment on this article.