Boutique financial advisory firm Wattle Partners said that investors should remain confident investing despite recent uncertainties.
While a number of factors including the Evergrande default, the US debt ceiling, the energy crisis, lockdown restrictions and APRA’s action on the property market have contributed to the ‘wall of worry’, Wattle Partners director Drew Meredith noted that his firm was “as comfortable investing today as at any point in the last five years”.
“There will always be a ‘wall of worry’, so today is no different,” Mr Meredith said.
“If anything, today’s environment is much better than many think given the clear statement of continued support from central banks and governments alike.”
Mr Meredith pointed to the importance of compounding returns to long-term wealth accumulation and said that always retaining at least some exposure to the markets remains key.
“I’m yet to see a single person, professional or self-directed, successfully call both the top and bottom of any market in two decades,” said Mr Meredith.
He also drew attention to the “massive expansion” in investment opportunities available to investors who can move their focus away from sectors or markets that are considered to be overvalued.
“There is a growing cohort of companies and stocks that are trading nowhere near their full or highest valuations, and opportunities abound in global equity markets,” he said.
Addressing a range of recent worries about the share market, AMP Capital chief economist Shane Oliver said that it was too early to determine whether the pullback that began in September was now over.
“The extent of the rally since March last year – US shares more than doubled and Australian shares rose 68 per cent – has left them vulnerable to a deeper pullback,” he said.
However, Dr Oliver explained that the main determining factor for a correction or mild bear market versus a major bear market has historically been whether a recession occurs.
“Right now, it remains doubtful that the worry list will be enough to drive a US, global or Australian recession,” Dr Oliver said.
“Ultimately, we see the issues being largely resolved in a way that does not severely threaten global growth and so with global monetary policy likely to remain relatively easy for some time, we continue to see the broader trend in global and Australian shares remaining up, once the correction runs its course.”
