Just as the Kenny Rogers classic “Coward of the County” ponders whether to play or to fold the cards, you may be facing a similar quandary in your investment portfolio.
The VIX Volatility Index has risen 30% in the last fortnight based on the debt crisis in Greece and the uncertainty facing the rest of Southern Europe.
There are considerable negative reports in the international press.
In contrast, the Australian stock market has recovered a significant proportion of its GFC related losses and we are constantly being told how strong our local economy is performing with our banks starting to announce extraordinarily strong results. But where are we headed?
The idea that you simply “hold onto your investments because eventually the market will go up” is not the best investment strategy.
Your risk appetite will differ from the next person. You know what keeps you awake at night and your family knows whether you can relax on the weekend. It is of critical importance that you communicate your “risk appetite” to us as your advisers. It may also change over time.
Selling can be a good risk minimisation strategy during times of uncertainty. It is something you should seriously consider. You can always buy back in... the next day, week or in months to follow.
