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Global investment market turmoil has continued this past month, although some signs of stabilisation are starting to emerge. We view these falls as a correction and remain positive in terms of the bull market we’ve been experiencing in shares. In this video, Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital, provides an update on market conditions, including investor opportunities these present and tips to remain savvy during investment market volatility.

Top tips for investors during market volatility

1. Recognise that shares are invariably volatile – that’s the price you pay for the higher long-term returns you get from shares.

2. Selling after sharp falls locks in a loss – it turns a paper loss into a real loss.

3. Look for opportunities that the decline throws up – this is the time to find a bargain.

4. Dividend payments won’t change – if it’s dividend income you’re after, this won’t have changed provided you have a well-diversified portfolio.

Final thoughts

Looking globally, the usual conditions that set-up for a major bear market don’t currently exist therefore, our overall outlook for share markets remains positive.

Article by Dr Shane Oliver

AMP Capital 10 September 2015

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

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About the Author

Head of Investment Strategy and Economics and Chief Economist at AMP Capital, Shane is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.

Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.

This year, what happens in the US is critically important to what happens in the global economy because of the intense focus on the Federal Reserve (Fed). We’ve had near-zero interest rates since the onset of the global financial crisis, and the Fed has indicated that at some point, probably this year, it will start to raise rates.

In this video, Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital, provides an update on the US economy.

A couple of critically important points for investors to remember

• When the Fed does start to raise rates, it will only be because the US economy is coming out of the danger zone that it’s been in since the global financial crisis. As the US economy gets back on track, the Fed can start to take more of the medicine away;

• Any tightening in monetary policy will be a very gradual process. There is no need to be aggressive in an environment where inflationary pressures are very low;

• Historically, there has typically been a bit of volatility and corrective activity in share markets around the time of tightening. Once the market starts to get used to the fact that the Fed is only tightening because of stronger growth, the bull market in shares should resume.

Final thoughts

Our base case is that the US Federal Reserve will raise interest rates later this year, probably around September. When they do start to raise interest rates, the key is that it will be a very gradual process.

About the Author

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.