Agree re the pension, at the start of covid I really shat myself watching my fund go down (started saving at 20), thinking no retirement for me. Held out though and now its stronger than ever.A lot of this recent sell off is due to the fear that the Fed will raise rates at a pace that the markets don’t like and will wind up their QE programme too quickly. The notes they released earlier this month have spooked markets, in particular growth orientated funds, as the perception is that the cheap money that they have had access to for 13 years is coming to an end.
This has hit Tech hard and other sectors have been hit due to the perceived squeeze that higher rates and inflation will have on spending power. The Fed and other global central banks have a difficult job. Controlling rampant inflation whilst at the same time ensuring that their decisions don’t harm economic recovery is a fine balancing act. I’m sure even the policy makers will be alarmed at how their comments have impacted the markets! It wouldn’t surprise me to see these comments toned down in subsequent meeting minutes.
History has shown that most falls that are severe and reactionary tend to be overdone and the subsequent bounce can be strong. Is Microsoft really worth 12% less than it was 2 weeks ago?
The FTSE100 has held up well due to its constituents being more “old economy” like Oil and Gas, Mining, Banks and Insurers. all benefitting from energy price rises/higher rate perception. It is giving a false impression to many at the moment as that’s the one that tends to be on News at Ten! Value funds are winning the race at the moment but of course they have lagged for years.
My view is if you don’t need the cash, you revert back to your original objective and risk appetite and you step back from looking at it for a few weeks. Sometimes heart rules head when you see your hard earned falling but those who react to short term noise are often the ones who lose out. My pension was down by 35% in the weeks after Covid. It had recovered all of this 6m later. It wasn’t comfortable viewing but I didn’t need or was even able to access it so kept the faith.