She is Head of Asset Allocation and Thematic Strategy in the Chief Investment Office of Wealth Management at Standard Chartered Bank In the financial markets, Audrey Goh pointed out that investors suffered from a fierce bear market for stocks in the past year, Noting that there is nothing more frightening than a bear market, which is characterized by falling asset prices by more than 20%.
Goh pointed out that bonds also fell sharply, making 2023 one of the worst years in history 150 years, especially with the consensus expecting a recession this year.
Bloomberg called this recession one of the most anticipated recessions ever, while the S&P500 volatility index is falling (VIX), which is called the stock market fear index, near pre-lows epidemic.
And she continued in her article: While this may indicate that investors underestimate the risk , and thus increases the potential for a potential market downturn, it is crucial not to lose sight of the importance of continuing to invest The long-term
She said that there are some valuable lessons that can be learned, including fixations, that is, not to focus excessively on Predicting recessions or bear markets when making investment decisions, noting that the best days for returns are in Stock markets happen along with the worst days for returns, hence, a few miss out Only one of the best performing days, while trying to time slumps and recovery periods, can have it Significant impact on overall portfolio returns over the long term.
She advised buying stocks when they are low (during recessions), while this approach does not Ensures better results, lower purchase prices generally lead to higher expected returns.
The second factor is the focus on long-term returns, as annual returns can fluctuate dramatically From year to year, however, rolling returns for 20 to 30 years tend to remain stable Relatively speaking, and there will always be concerns no matter what the market conditions are, whether it is concerns about Further declines in the market or a pullback after a sharp upswing.
She also advised thinking about “dollar cost averaging,” rather than staying out of the market entirely, that is Rather than trying to time the markets, think about the benefits of a regular investment of a fixed amount at intervals predetermined time, regardless of market conditions.
Dollar cost averaging allows you to buy more when prices are low and less when prices are high. Over time, this strategy can help mitigate the impact of market volatility. More importantly, it also inculcates a disciplined approach to investing, which helps a person stay on the path correct without succumbing to the emotional reactions of short-term market movements.
The third advice is to regularly review and rebalance the investment portfolio, noting that diversifying investments across categories Assets and Zones is a time-tested way to increase the chances of achieving your long-term return target, while reducing risks.
She explained that market movements can cause an investor’s diversified asset allocation to deviate away from the risk profile The point is, therefore, that you need to periodically reassess the portfolio and rebalance it to the target allocation.
She emphasized that rebalancing also leads the investor to buy assets whose prices have fallen and reap some profits An asset that has appreciated in value, regardless of the investor’s views on the market. In this sense, it is an implied “buy low, sell high” strategy.
