After October’s turmoil, the great autumn sale begins!

As you are doubtless aware, October has been a difficult month for global stock markets but sometimes corrections such as these can present buying opportunities. The following article by Holly Black is taken from the Money Section of yesterdays’ Sunday Times.

“A worldwide stock market sell-off means you may get more for your money if you buy now

October may have been a monstrous month for the stock market, but that means now may be a great time to put more money into your investments.

The FTSE 100 index suffered its worst month since August 2015 with a 4.7% fall. Markets around the world fared even worse. America’s S&P 500 dropped 6.9% — its worst month since September 2011. In Japan, the Nikkei sank 9.6% and China’s Hang Seng index fell 10%.

The sell-off was driven by a number of concerns, including interest-rate rises in America, the winding down of quantitative easing, Brexit and the trade war between America and China.

However, anxious investors should think again if tempted to stash their cash under the mattress. Experts say this could be the perfect time to stock up on shares.

Ryan Hughes, head of funds at the investment supermarket AJ Bell, said: “Some investors will have checked their investment account balances in October and panicked, but it’s crucial to remember you are investing for the long term and have time to ride out these ups and downs.

“This has been a timely reminder, after a record bull run, that stock markets can go down as well as up.”

Investing money when stock markets are falling may seem counterintuitive. However, provided you believe in their long-term prospects, it is like shoppers getting a bargain in the sales, because the shares you are buying now were more expensive a month ago.

If you quit the market now, you are crystallising losses.

David Coombs, manager of the Rathbone Strategic Growth fund, said: “ ‘Buy low’ is a pretty basic investment philosophy. We look at companies we already invest in and, if we still think they’re just as good as they were a month ago, we just buy more at a cheaper price.” He has been putting more money into American giants such as Amazon, Visa and Mastercard, as well as the British sales and marketing company DCC. Coombs also likes video-game makers, including Electronic Arts, home of the Fifa series and The Sims.

His fund is down 4.4% over the past month but up 22.8% over three years.

Nathan Sweeney, senior investment manager at the funds firm Architas, has taken the opportunity to put more money in US tech giants. The share price of Amazon and Netflix plunged by about 20% last month. Alphabet, the owner of Google, fell 10% and Facebook 8%.

Sweeney said: “You just have to work out the reason for the sell-off and whether there’s anything to actually be concerned about. People will continue to use search engines and social media regardless of the economy, so there’s no reason not to invest in these firms.”

Sweeney likes the Artemis US Extended Alpha fund, which is down 5.3% over the past month but has returned 67.9% over three years. Its big holdings include Microsoft and Apple.

Blog 5th Nov 1.jpg
Blog 5th Nov 2.jpg

Alex Wright, manager of the Fidelity Special Situations fund, is a contrarian investor, buying the shares that others hate. His current top holdings include Lloyds Banking Group, the oil giant Royal Dutch Shell and the struggling education group Pearson. The fund fell 6.7% over the past month but is up 29% over three years.

Wright said: “I am feeling increasingly positive about the outlook for the UK market, and the reason for that is chiefly how negative everybody else seems to be.” Investors still need to be selective, though. Coombs said the key, during a sell-off, is to add to investments you already hold rather than gambling on risky, new names just because their share price has plunged.

October is historically a rollercoaster ride for investors. Some of the biggest stock-market crashes have occurred during the month, including Black Monday in 1987, when the FTSE 100 plunged more than 20%. In October 2008, when the financial crisis took hold, the index of Britain’s biggest public companies fell by 12% over the month.

Staying invested during such tumultuous periods means you benefit when share prices recover.

Setting up a regular savings plan is a good way to ensure you are in a position to reap the rewards.

Hughes at AJ Bell said: “Even professionals struggle to time the stock market, so investors who think they can predict exactly when it will rise and fall will find it’s nigh on impossible and they will probably miss out on returns by trying.”

Investing every month has the added benefit of pound-cost averaging. You end up getting better value for money from investments over the long term because your money buys more shares when they are cheap and fewer when they are expensive.

Coombs said: “I can’t predict what is going to happen in the stock market but I can ignore all the noise from people saying we’re all doomed.”

As always, if you have any questions on this subject or indeed on any other finance related matter, please do not hesitate to call me.

With kind regards,

Yours sincerely


Graham Ponting CFP Chartered MCSI

Managing Partner