• Last Friday the news reported the ASX has declined 10.25% this past year – This takes the market to the level it was pre pandemic, the market is still very strong compared to around the world.
  • There is lots of talk about interest rate rises in the US – they are at historical lows and an important lever of monetary policy so this appears inevitable.
  • There has been fall in US Technology shares – These have a very high PE and can be expected to fall if market sentiment does, many would say these were far too bullish.

Talk about market sentiment inevitably leads to discussing market volatility, I believe that this was inevitable after;

  • A global pandemic that has had all countries around the world in some form of extended lockdown,
  • So many industries and businesses unable to work,
  • Hospitality, tourism and travel globally at a standstill,
  • Labour and supply chain issues increasing.

The following is some information regarding your strategies and how they deal with these events..



  1. We expect markets to move up and down over time due to world events, performance and changes in market sentiment etc.
  2. Your wealth plan should consider and caters for this.
  3. We may not have expected a pandemic but given the worldwide response it seems probable economies will emerge and continue similar to other market corrections.


  1. Diversification is your defence against market volatility, your investments are diversified i.e. they are exposed to many different asset sectors both here and globally.
  2. Diversification is a broad concept from asset classes to managers and investment styles etc.
  3. Most people have managed investments and these are often diversified.


  1. How long you intend to be invested combined with your risk profile is also key in dealing with volatility e.g. the recommendation for growth profiles is greater than 5 years.
  2. As it is expected that you will experience ups and downs during your investment timeframe in most cases you will be recommended to;
  • stay invested,
  • ride out the down turn and
  • remember it is time in the market not timing the market that matters.


  1. At this point in the cycle many clients will call wanting to sell out (at a high point) with the idea that they will rebuy when they see the rebound.
  2. This seems logical but research will show that the rebounds happen suddenly and substantially and hence most will miss the “bounce”.
  3. Hence the above 3 bullet points will likely apply.


  1. The returns for the market over the past couple of years have been strong.
  2. At present any correction is taking the cream off the top of these strong returns, but we will need to wait and see where the markets are heading.


Please call if you wish to discuss this further.

Adrian and the VJC Wealth team

General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article then you should seek advice from a qualified professional. VJC accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement with VJC for this purpose.