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Eurozone investment market volatility

Eurozone investment market volatility was legendary in the 2010 through 2012 period. Lessons were learned from the experiences in that sector – and they can/ will be applied in other areas, both geographic and industry/ economic.

Welcome to the EuroZone theme park!
You earned your first stripes by surviving the Grecian tumbler –
…. now you’re off on the Italian Spin ride!
(If you make it through this adventure, we may be able to bring you the French flair ride –
…. but watch this space: they may be reluctant to participate! Don’t despair –
…. other countries are seeking to contribute to the expo of extreme rides as well.)

We don’t want to be seen to be flippant nor overly cynical, but there are observations that can be made, comparisons drawn and experiences to revisit that help us all to cope with the volatility in market valuations and investor sentiment in these times.

There are numerous cross-relationships when you look at Global business and financial markets. International companies trade in all of the major economic zones – and borrow money locally from the financial sector in each of those zones. Banks across the globe engage in financial transactions that, whilst they don’t all have direct significant impact, cause some pain when any one of the regions comes under stress: so – Where are the safe havens in this environment?

To start to get some control of our thinking we need to consider what constitutes a ‘safe haven’ – is it somewhere that means the nominal value of the assets doesn’t change? Is it somewhere that means the income stream from the asset holds up whilst the asset value changes at a more conservative pace than the rest of the asset classes? Is it Gold…or Cash…or Bonds…or large cap equities (in which market region or industry sector?)…or Commodities? The answer will be different for each of us.

Continuum Financial Planners Pty Ltd suggests that the safe haven is your financial plan – the strategic advice document that is more focused on the assets and resources available to you, your risk aversion as an investor – and the timeframe that you have available to work with: the investment products that are selected for use to implement the strategy certainly need to be carefully selected and monitored as to consistent ‘true to label’ performance, but working to a personalised, professional wealth management strategy will give you the confidence to survive the ‘adventure park’ that is experienced in volatile times.

Linked to this communiqué are some charts and articles from elsewhere in our archives as well as from other authors that will hopefully add to your understanding and resolve in relation to the current market volatility.

Our experienced advisers regularly work with new clients, developing strategies and advice for their financial journey. We are usually open to accepting new clients and welcome referrals from our client group and other referrers. To arrange a meeting to discuss your affairs – or for family, friends or colleagues to be introduced to our services – please call our office on 07 3421 3456 – or use the online Contact Us facility.

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(This article was first published in November 2011: it has been refreshed/ updated occasionally, most recently in June 2017)
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