Just as turbulence is a characteristic of flying, volatility is a characteristic of capital markets!

As investors we have all experienced turbulence in 2020, yet if you stayed seated and fastened your seatbelt, as a client of Wells Gibson, you will have noticed the value of their portfolio has more or less recovered the falls you experienced in the first few months of the year.

Market falls are inevitable when investing and often these falls can be alarming and at an unexpected degree.  Although, we should expect falls at some point, we need to remember these declines are always temporary.  No one knows when and at what magnitude these falls will occur so here’s top 10 tips for your portfolio’s survival:


  1. Embrace the uncertainty of markets – that’s what delivers you with strong, long-term returns.


  1. Don’t look at your portfolio too often. Once a year is more than enough.


  1. Accept that you cannot time when to be in and out of markets – it is simply not possible. Resign yourself to the fact.  Hindsight prophecies – ‘I knew the market was going to crash’ – are not allowed.


  1. If markets have fallen, remember that you still own everything you did before (the same, lower-risk, bond holdings and the same higher-risk shares in the same companies).


  1. A fall does not turn into a loss unless you sell your investments at the wrong time. If you don’t need the money, why would you sell?


  1. Falls in the markets and recoveries to previous highs are likely to sit well inside your long-term investment horizon, in other words, when you need your money.


  1. The balance between your lower-risk, defensive assets (high quality bonds) and higher-risk, growth assets (equities / shares) was established by Wells Gibson to make sure that you can withstand temporary falls in the value of your portfolio, both emotionally and financially, and that your portfolio has sufficient growth assets to deliver the returns needed to fund your lifestyle.


  1. Be confident that your (boring) defensive assets will come into their own, protecting your portfolio from some of equity market falls. Be confident that you have many investment eggs held in several different baskets.


  1. If you are taking an income from your portfolio, remember that if equities have fallen in value, you will be taking your income from your bonds, not selling equities when they are lower value.


  1. Last and by no means least, we are available to talk to you at any time and as your lifetime wealth partner, we will urge you to stay the course and be a source of fortitude, patience and discipline. In all likelihood we will advise you to sell bonds and buy equities, just when you feel like doing the opposite.


Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

Header image by Photo by Ewan Harvey on Unsplash