The current stock market downturn is close to the bottom, predicts the CEO and founder of a leading financial advisory, and said that investors should position their portfolios for a rally.
The bullish prediction from deVere Group’s Nigel Green comes as stock markets have been rattled for the past few months over fears of persistently high inflation, aggressive central bank interest rate hikes, strict Covid lockdowns in China, and international supply chain issues.
The three major equity indexes on Wall Street have experienced their worst stretch of losses in decades. Elsewhere, the pan-European Stoxx 600 is down almost 12% year-to-date and the MSCI Asia ex-Japan has shed 18.62% since the turn of the year.
“The market downturn has been pretty brutal, and been triggered by a variety of different factors, but I’m confident that we’re close to the bottom,” said Green.
“One good indicator is that tracking services reveal that ‘insiders’ are on a buying spree. They’re taking advantage of reasonable valuations to top-up stakes in value companies in order to create and grow wealth in the longer term.”
An insider is a director, senior officer, entity, or individual who owns more than 10% of a publicly traded company’s voting shares.
“With a bounce on its way, investors should be positioning portfolios to take advantage of the rally,” noted the deVere CEO.
“However, there’s a caution too. It’s not just about piling into lower-priced, high-quality investments; it is also about buying judiciously and being aware of the shifting economic landscapes and trends.”
He added that exposure to sectors including energy, infrastructure, commodities, pharma, and consumer staples with strong branding ability, makes sense.
“Portfolio diversification is key and plays an essential role in managing volatility,” Green said.
Avoiding the “eggs in one basket” scenario significantly reduces the risk of all asset classes in a portfolio declining at the same time. Investors will miss out on the longer-term advantages they could be accruing if they don’t maintain a properly diversified portfolio, he explained.
“Diversification should always remain on track with the investor’s risk appetite and offer a suitable balance across asset classes, geographical regions and sectors,” said Green.
“The markets have been shaken in recent months, but now I’m calling it: the bottom is very close,” he said.
“With a well-devised plan, a diversified portfolio, and an advisor, investors will be well-positioned to benefit from the forthcoming rally.”