Buy low and sell high – an axiom in the financial markets and investing.
And given currently investors find themselves in the throes of the worst global market sell-off since the 2008 crash will find, if ready, an important buying-opportunity for investors amid the carnage. That’s the opinion of Nigel Green, CEO and founder of deVere Group, as equities lost a tenth of their value this week as investors piled into havens on growing concerns the coronavirus outbreak will hit the world economy and impact corporate profits.
“Until this week, the markets had largely shrugged off the impact of the outbreak of coronavirus. We warned about complacency leaving many wide-open to nasty surprises,” he said. “This has now changed. Investors have done a ‘one eighty’ – from a muted overly confident reaction to the serious and far-reaching global issue of coronavirus to running like headless chickens. Both extremes are worrying and could potentially wreak havoc on investors’ returns.”
But, there is the silver lining – the worst global market sell-off since the 2008 crash will almost certainly become an important buying-opportunity for many investors as they become flush with cash.
“With markets on the brink of correction territory, panic-selling, mis-pricing of high quality equities, and lower entry points, this could turn out to be one of the key buying opportunities in the last 10 years,” Green said. “Some of the most successful investors will embrace volatility to create, maximise and protect their wealth.
Last week Green noted: “In the current volatile environment, investors – including myself – will be revising their portfolios and drip-feeding new money into the market to take advantage of the opportunities whilst reducing risk at the same time.”
The deVere CEO expects much bargain hunting to come in te coming days and possibly weeks as the market reprices itself and more news regarding coronavirus emerges.
“Of course, no–one knows for sure what will happen in the immediate future but, as stock markets typically rise over a longer-term period, now is the time to capitalize on the more favorable prices of decent stocks,” Green said.
