BFS Newsletter January 2022: Correction Territory

BFS Newsletter January 2022: Prism showing a beam of white light hitting one side and multiple colours being emitted from the opposite side.

I hope you are all doing well and staying clear of Covid, and that life is as normal as you hope it can be?

This week has been very interesting for Financial Markets, as we have seen the Aussie market enter “correction” territory with a fall of more than 10% since the peak.

I have spoken to some worried clients, of course, and I do understand the concern but as you would expect me to say, we invest for the long term and living through these periods is just part of investing.

No doubt this is a great time, of course, to buy if you can. I love it when anything is “on sale” and now we have shares on sale too!

I do hear from clients who believe that we should sell when markets are strong but bad news around. They say that all we need is to sell into cash and then buy back when markets have bottomed out.

This is easy, yes?

Well actually, no not at all. There is much evidence to show that if we try this, we will not get the sell right (too early or too late) and worse still we will miss the good market days whilst we are still in cash and delay the return until the market has already delivered strong gains that we have missed. The lesson is simple, ride with it, but if we can, take income (dividends) while growth is backward, and we will win in the medium and long term.

Make a Stash!

This month’s song for me must be Money by Pink Floyd which has always resonated well with me: Grab that cash with both hands and make a stash!

Anyway, until next time – stay safe and positive!