Riding out Investment Blips

By voting to leave the European Union, voters in Britain sparked an unusual trading frenzy, which might be one of the most significant in history. Loses were staggering more than $2 trillion (US) according to a senior index analyst at S& P Dow Jones Indices.

Although investors may have found themselves materially poorer on paper, there is comfort in knowing that the markets have the ability to quickly regain stability. Months after events such as this occurs, the decrease and increase in investor’s portfolios are known as a blip. A lesson to be learned from historically unsettling times such as Brexit, 911etc. Is that this too shall pass!

Over the years there have been numerous examples of global events impacting stock markets around the world. Brexit is only one example of market volatility and uncertainly.

A second example of a “blip” would include the terrorist attack on the United States on September 11, 2001. The US stock markets and worldwide markets were impacted. The main US benchmark regained what was lost within a few months.

A third example of a stock market “blip” occurred on September 29, 2008 when the United States bailout plan failed and global panic caused the S & P 500 Index to drop 9 percent in a single day. Over the next month, the losses would be approximately 30 percent. The recovery period for this “blip” was approximately 2 years.

A further example of a “blip” occurred in August 2011 when the European debt crisis and the US congress debates over raising the US debt ceiling caused a downturn trend in the stock markets, which responded within 6 months to return to previous levels.

A balanced portfolio will help to neutralize the ups and downs in the markets. Market volatility is a part of history and is tracked over the last 60 years. Investors who hold on and have balanced portfolios that matches their investment goals and time horizon are often less stressed and are less impacted by geopolitical and financial events in Canada, the United States and the rest of the world.

No advisor has a crystal ball to predict the future. Make sure your investments have been reviewed at least annually to help ensure that your future income, healthcare needs and investments can stand the tests of time and future financial “blips”!