If US trade war has made investing in financial markets feel like a trip to the dentist, it’s best to grin and bear it
Hannah Anderson says a pro-risk tilt in portfolios is still appropriate, despite recent volatility, given that market fundamentals remain solid
I make terrible decisions when I’m anxious. A trip to the dentist fills me with dread. Seeing an upcoming appointment, I am more likely to cancel than just get it over with. This provides temporary peace of mind, but negatively has an effect on my long-term health.
Despite recent volatility, a pro-risk tilt in portfolios is still appropriate. Fundamentals remain solid in most markets, judicious investor reactions to recent headlines are encouraging and the forthcoming earnings’ season should validate the views of equity optimists.
Investors should be aware it will take markets some time to fully and appropriately price in the impact of these policies – which is one reason that the reaction immediately after an announcement has borne little resemblance to market behaviour in the following days.