When stock markets crash and bad news just keeps on coming from all corners of the globe, panic is a natural reaction for many unit trust investors. Considering that the last significant market crash happened 11 years ago, this is also the first time that a new generation of unit trust investors would have been exposed to extreme market volatility.
A number of unprecedented shock events over a relatively short period of time have caused the perfect storm for global financial markets, says Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA). “The oil-price war between Russia and Saudi Arabia and concern about the impact of the coronavirus on the global economy have sent financial markets into a tailspin,” explains Campher.
He acknowledges that the pain felt by many investors who have seen the value of their investments decline in recent weeks is likely to be compounded by the emotional stress presented by the COVID-19 pandemic.
However, says Campher, emotional reactions rarely lead to prudent investment decisions. “Just as Wall Street halts trading for 15 minutes to force traders to catch their breath and consider their investment decisions when indices drop by more than 7%, individual investors should reflect on the situation before taking decisions, preferably with the help of a qualified financial adviser.”
To read more about why consumers are advised to leave their unit trusts untouched or risk locking in their losses, visit the ASISA website.