RE: Sp6 Jun 2024 16:32
Old Mutual reassures investors to stay the course in wake of 2024 SA election
31 May 2024
In the wake of South Africa’s General Election, and financial markets bracing for potential turbulence, Old Mutual advises investors to maintain resilience in their investment strategies and to resist making hasty decisions driven by short-term market fluctuations.
Source: Wikipedia.
Source: Wikipedia.
Johann Els, chief economist at Old Mutual, says that investors must prepare for potential market swings across various asset classes in anticipation of the elections.
“Political transitions breed uncertainty, often leading to heightened market volatility,” he notes. “However, looking at historical insights from political shifts in financial markets, markets tend to stabilise, and investors may notice a return to more predictable patterns."
According to Lizl Budhram, head of Advice at Old Mutual, this fact underscores the imperative of maintaining a long-term perspective when markets respond to bad news. "South African investors must stay the course and exercise caution against impulsive decisions triggered by transient market downturns.”
She says that when investors act hastily and sell off their assets during a market dip, they often lock in their losses, which might have been recovered had they held onto their investments.
“Staying invested, on the other hand, allows investors the potential to participate in the market’s eventual recovery, which historically follows most downturns. Moreover, the opportunity cost of exiting the market can be quite substantial.
"This is because when investors sell their investments during a market dip, they are essentially selling their assets when the market values them at their lowest, often not receiving their true value. They then move this money into safer, but less profitable investments, such as cash, because they’re worried.
“This decision then locks in their losses and also means they could miss out on making more money later when more profitable opportunities come up.”
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