Navigating Market Volatility – Helping You Understand

With the recent market volatility over the past six months, we wanted to provide insights and market updates to help alleviate some stress.

At Visia, we strive to offer peace of mind that we have put the measures in place to ensure you and your investments are well looked after.

 

If you have been to the supermarkets recently, then the above image is an all too familiar sight.

COVID-19 restrictions and quarantine are is wiping out whole factories of workers, taking out ports, leaving ships bobbing around waiting at sea and truck drivers in isolation trying to prevent the spread.

The supply chain problems of 2021 didn’t have a chance to be repaired, and now with the borders opening, Omicron and a second wave coming along…everything has gotten a lot worse.

Unfortunately, empty shelves are going to be the new normal for the foreseeable future. Products will be scarce or priced highly as demand grows.

All of this is inflationary.

What is inflation, and how does it impact me?

Alright…so what is inflation and how does it impact the cost of living and investment markets?

By definition, inflation is an increase in prices of the goods and services that households buy. It is measured as the rate of change of those prices.

There are two things that are likely to happen when inflation starts trending upwards.

• Companies need to pay workers more to afford the same things.
• The RBA raises interest rates. This is designed to put pressure on companies to raise prices a bit less to reduce the cost of living.

Higher interest rates are good for consumers with money in the bank, however it is not so good for consumers with mortgage repayments who have a bit less left over to spend to stimulate the economy.

Inflation impacts markets too. Higher inflation is usually seen as a negative for stocks because it typically results in….

• Increased borrowing costs,
• Higher costs of materials and labour,
• Reduced expectations of earnings growth.

But…we are here to take the uncertainty out of your investments

​As part of your ongoing review process each year, the team at Visia have been reviewing your investment portfolio using tactical asset allocation and selecting excellent fund managers who are experts in portfolio management.

We’ve chosen fund managers that take profits regularly when the markets are high and purchase more investments with the markets are declining, or a company is undervalued.

Knowing when to take profits is better tactical asset allocation than passive asset allocation, which usually suits real estate buy and hold.

If you would like to know more, please contact us for an update on your investment strategy.