Volatility is back! After a relatively tame quarter, Omicron threatens to turn the market calmness on it’s head.
The seasons roll around quickly, and in the last week of each one, I go looking for ideas to write about for the headline article of our quarterly e-newsletter. With a domestic sharemarket that largely went sideways for the quarter, I was struggling for new ideas. I deliberately wanted to try and write a whole financial markets article without mentioning the virus. Ambitious I know, but until late last week I was so close!
Debate rages in the office on the pronunciation of “Omicron”. Hearing newsreaders stumble over it makes me thankful that I’m not alone in my struggles. Within days I’m sure it will be part of the vernacular for us all.
The discovery of a new strain of COVID caused almost instantaneous panic on domestic and global share markets. US sharemarkets had their worst performing day for over 12 months, and Australian markets fell substantially and quickly. This occurred late in the week which meant, for people like me, enduring a weekend of financial articles that ranged from “the end of the world is coming” right through to “there’s never been a better time to buy shares and property”. As always, the likely outcome is probably somewhere in the middle, but having that “fence sitting” view will never get me a gig with any of the big media outlets!
Omicron, like Delta before it, the initial outbreak before that, and countless other events in history, is likely to, in time, prove to have been another advantageous opportunity for investors. With investment markets (both shares and property) at all-time highs, and likely in over-bought territory, it makes sense that they are susceptible to any event that changes sentiment. The virus has provided us with numerous examples of that in recent times, with inflation, China and iron-ore all playing their part as well.
Our message to clients who are fully invested will be to continue to hold the course. Focus on your reasons for investing in the first place. They are unlikely to have changed. For those with cash sitting on the sidelines looking for an entry-point, it is likely that some decent opportunities will present themselves in the weeks and months ahead. Volatility and shifts in sentiment are a normal part of the investment cycle. Embracing this and using it to your advantage will help you sleep at night and avoid the panic of many other investors. Omicron is unlikely to provide an “all-in” opportunity, but it may provide an opportunity to add a little more to quality holdings.
If you would like to discuss your investments further, or would like to start out on the investment pathway, contact us. Our rational approach to investing aims to remove market noise, and we see this recent activity as no different.
