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What happened to the share market in October?!

Simon Curtain
Partner/Private Client Adviser
2 Nov 2018

After a solid run over 2018, the Australian and US share markets declined markedly over October, losing around 8% in value. As usual, there are a variety of factors at play but in my opinion there are two main points weighing heavily on markets:

  1. US interest rates – after record low interest rates, the US Federal Reserve is starting to increase (tighten) interest rates in the States. Generally speaking, increasing interest rates can cause share market volatility as investors see interest bearing securities (like bonds) offering more attractive rates of return.
  2. Trade Wars – the conflict between the US and China continues to intensify, creating uncertainty around the Globe.

While the above factors have the ability to move share markets here and around the Globe, the fact of the matter is, there is always something on the horizon for investors (and share markets) to worry about.

To put things in perspective, the chart below shows the Australian share market over the last five years, with four occasions highlighted where the market has fallen in value. As you can see, market declines are not uncommon and, interestingly, after each decline the share market recovered to a new high. I would expect this time to be no different.

Generally speaking, at Hewison Private Wealth, we don’t get too caught up in the day-to-day movements of the share market. We believe that if you buy quality assets and hold them for the longer term, they will provide value over time.

In spite of this, it can be difficult to focus on the long term when the 24-hour news cycle continues to publish doom and gloom reports.

My advice; ignore the noise and don’t let volatility get you down!

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.