A slightly less cheerful addition to our blogs than I would like to be writing but plenty of positives to be taken from it if you look hard.
♪ Look for the…. Bear Necessities ♪
Like Baloo said to Mowgli, ‘look for the bare necessities’. A lesson meant for children that we can take some enlightenment from and that I can squeeze an aptly accurate pun from.
At the time of writing this, Russia has invaded the Ukraine and the world his holding its breath. Meanwhile, markets react, and share values have taken an immediate hit on the potential for a larger war to unfold. On top of the inflation pressures, we wrote about in our last update, the consensus is gradually shifting to the potential for a Bear market.
What Does This Mean for you?
To quote Wikipedia on what is a bear market. ‘A general decline in the stock market over a period of time. It includes a transition from high investor optimism to widespread investor fear and pessimism.’
Yikes that sounds bad and yes it could be….. if it happens. Notice the words ‘fear’ & ‘pessimism’ in that quote. Sometimes the very fear that something will happen in a market, or at least the consensus that it could, causes exactly those things to happen.
So yes, there very well could be a selloff and if there is, it’s probably going to affect the stuff that is priced based on its future potential (growth stocks and tech) the most. However, it is possible that it will generally affect stocks worldwide, regardless.
But perhaps not the Necessities, which of course I mean Commodities.
What shall you do?
Let’s look at ‘Mother Nature’s Recipes’; gold, gas, oil, copper, grain, etc. Loosely compiled to metals, energy and agriculture. These things, that we take for granted, tend to go up in price in bear markets because we simply need them and cannot go without them.
How we can take advantage of this is simple. We buy the quality stocks, which have gone unloved in this 20-year bull market that we have had, that could well start to see some love. However, we won’t be selling everything we own right now. That is putting a lot of eggs in one basket. We certainly will be looking at being diversified for the coming years ahead, like we always do on your behalf.
If you would like further information on this topic, please contact me at Avidan@fusionfinancial.co.uk, or visit the Insights page to read our blogs and articles.
*The value of units can fall as well as rise, and you may not get back all of your original investment.
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