The malaise in financial markets is continuing with Australian shares now joining Europe, Japan and emerging markets in a bear market.
Global growth worries could drive more short term weakness. But in the absence of a US/global recession it’s hard to see a deep and long bear market.
The key for investors is to recognise that periodic declines in share markets are normal, that selling after big declines just locks in a loss, that dividend income from a well-diversified portfolio is little affected by share market volatility and that income flow from Australian shares is now very high relative to bank deposits.
The more we are exposed to information about how our investments are performing, the greater the risk that we will be disappointed and at risk of making poor short term investment decisions.
The greater access to information around short term investment performance and the ever present worry list around investing via traditional media and increasingly from apps on our phones is likely accentuating this risk.
The key is to turn down the volume on financial news and find ways to filter it such that it doesn’t distort investment decisions.