graph of falling share market valuation against background of Greek pantheonInvestment market anxiety reflects the state of mind of people participating in those markets – whether as investors, day-traders, speculators or as passive observers (perhaps members of superannuation funds). It arises in all markets – equities, property and bonds (and any ‘derivatives’ of those asset classes).

Opening Understatement: “… there is a fairly high level of anxiety about the market place at present.” (January 2008).

Commentary1:

Who among us should be concerned at a time like we were experiencing (in late 2007/ early-2008)? In short, sellers! Sellers can find themselves in this category for a number of reasons – some unplanned, others subject to situations where the selling plans may be able to be deferred. (As a belated comment – in 2017 – we note that there has been almost a decade of growth in market valuations since the horrific days of the GFC: investors today, are more anxious about low returns than they are about market volatility, but they have generally adopted a less aggressive investment asset allocation.)

In listening to the commentators on CNBC, SKY Business and Bloomberg in January 2008, investment market anxiety leading to panic selling seemed to be the order of the day among the share-traders across the world – and their panic fueled the spiraling pricing of the market. Regrettably for those who were caught in a situation where they were compelled to sell out of the market at the time, serious losses were incurred.

Investment market anxiety tamed

Whilst very few of our clients are traders as such, some found themselves needing to raise funds to settle debts or to support business cashflow – for which the most obvious source at the time, was their investment portfolio. Clients experiencing such investor dilemma, whereby selling investment assets was contemplated to meet financial obligations, were encouraged to consult with us before taking that action. In some cases, other financial arrangements were able to be made so that the sell decision was deferred.

As a long-term investor, whether in your wealth accumulation phase, in pre-retirement pension phase or actually in retirement, our clients work to a well-structured financial strategic plan and have ample opportunity to recover from any paper losses that arise in periods of market volatility – and minimise their exposure to the otherwise attendant investor anxiety.

None of us like to give up gains but it is a fact that all markets are subject to cycles. Financial markets in Australia have enjoyed unprecedented periods of growth for the past twelve to fifteen years – and these were discussed during our Client Briefings towards the end of 2007. Many clients have discussed with us their concern that the markets would eventually cease their climb – or in fact, fall. This situation has not been unanticipated: the timing and initial quantum of the fall may have caught some off-guard though.

We issued the initial version of this commentary to assure clients of our confidence that the strategic decisions that they have committed to, are sound; that markets ultimately revert to their long-term trends; and that even without being particularly concerned with timing the market (to find the bottom), there were good buying opportunities for the long-term investor arising on a number of fronts.

In closing: words of advice – don’t activate any plans for your portfolio without consulting your financial adviser, especially don’t panic sell!!

Commentary on consequences arising from investment markets as they stood in January 2008: they are the views of Continuum Financial Planners Pty Ltd as expressed by its Managing Director, as at 22 January 2008. It was distributed to clients Tuesday 22 January 2008 as an email attachment; and posted to the Continuum Financial Planners Pty Ltd website on that date. It is repeated here as an historical record of our reactions to the emerging GFC as it was at that time. The commentary has been revised to reflect that it is now in the past tense, and irrelevant speculation about the markets, removed: this update has been made in June 2017. It has been further refreshed in January 2020.