Whilst I don't believe market forecasters have a crystal ball, it's clear that over the last two years Coronavirus, radical political leaders, and now a potential energy crisis have unsettled businesses and market investors alike.
As markets dropped in the early part of the pandemic, I bought into some generalised funds, as the recovery seems relatively predictable. As we move back towards normality however, things are less predictable, and questions remain about the stability of markets, and whether stocks are now over-priced. So where do we go from here?
Remind yourself of your goals
Whilst "profit" is an obvious goal for investors, the timeline for this profit is more unique to the investor. Those getting close to retirement will likely have a different appetite for risk than those in their 20's.
It's important to work out your own appetite for risk. For me, my appetite for risk has grown has I've become more confident in my approach. My goal is however set on the long-term, and this is important as it means I'm not worried by short term negative impacts, as I saw the Covid pandemic to be.
Move investments to lower your portfolio risk
Once you've established your goals and your appetite for risk, it's time to re-evaluate your portfolio. High risk options can be sold and replaced with long-term reliable companies that deliver in a more stable manner. This reduces your potential for gains but also losses.
I lean towards organisations that are well established in their industry, and who provide services that people can't really live without, such as utility companies, household products and food/drink. You can probably think of plenty of other companies whose market is unlikely to suddenly stop buying.
Whilst there is no certainly of a profit, or lack of loss, in any investment, a reduction in your risk profile is something only you can decide on. For me, there is clearly a change coming, the question is how far away it is, and how much risk (in the hope of higher rewards) to run with in the meanwhile.
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