10th November 2016

Some events shake the world – and there’s no denying that the result of the US election is one of the largest quakes for some time.

Political change is one of the biggest influences on investments, creating often rapid and sharp responses which can be a frightening thing to watch.

One way or another, almost everyone is dependent upon the state of the markets.

Donald Trump on the 2016 campaign trail

Shares and funds are the obvious elements of most investments which react first and most clearly and, of course, pensions and other investment vehicles are built upon those holdings in the world’s companies, sovereign funds and the like.

It’s easy to be concerned by big price fluctuations and when there are large sell-offs it’s logical in some ways to wonder if those us with more modest investments should be doing the same.

However knee-jerk reactions are one of the quickest ways to destroy your own wealth. If you are not a day-trader or someone looking to make a “quick buck”, you should almost always view the markets over the longer term.

Professional traders often see a day like today as an opportunity rather than a threat. Millions of people rush to sell, often merely compounding the losses which happened before they could react and those professionals can derive a benefit from that.

What smaller investors would most often be better doing (assuming they don’t need those investments turning into cash in the very short term) is either waiting it out or even taking what is known as a “contrarian” approach and buying more while the prices of good investments are artificially and temporarily low.

Don’t panic!

In fact, sticking with regular investments smooths out the cost because you keep on buying when they are both high and low, negating the worst effects of either situation.

Day-by-day markets are a dangerous thing to play with if you don’t have a plan, a good understanding of your longer term aims and a large amount of knowledge and experience.

If you have good advisors behind you, who have taken the time to get to know your needs and aspirations, they will be able to reassure you or make any moves on your behalf that their experience tells them will stand the best chance of being beneficial for you and your loved ones.

The message, quite simply, is that when there are seismic events in the world and the 24-hour news channels are obsessing about the state of the markets, you will increase your chances of losing money if you react in panic.

Seek good, impartial advice and you could find you are looking at an opportunity.