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Investors must not panic

DESPITE the current difficult market conditions, investors should keep a long-term view and stick with the solutions they have chosen in line with their long-term goals.

In the past two weeks there has been renewed concerns as stock markets around the world, including the JSE suffered losses due to the high level of uncertainty in the global economy.

Peter Brooke, pictured, head of macro strategy investment boutique at Old Mutual Investment Group, said it was important for investors not to panic and sell in the current economic conditions.

He said renewed concerns over slowing US and global growth, plus the European debt crisis, continued to knock the market, and every new piece of negative data was sparking a sell-off.

Brooke said the biggest risk to the global economy right now was that sustained market panic could itself trigger a recession as falling asset values seriously dented consumer and business sentiment.

"This, in turn, could cause cutbacks in household and corporate spending, exactly the stuff recessions are made of.

"We are in for more volatility ahead in the equity markets, until investors can see some resolution over US growth and European debt issues," Brooke said.

"Until then investors should ignore the short-term dips and stay focused on having well-diversified portfolios that meet their own risk and return requirements.

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