Saturday, May 27, 2006

What a difference a week makes.....

Having been away for just over a week, it is quite interesting how much volatility the markets and the value of my investments experienced in a relatively short space of time. The value of the share portfolio, the unit trusts and silver all dropped by amounts that were noticable but, in the overall scheme of things, not significant.

I have asked myself whether this volatility marks the end of the bull market or is merely an overdue correction in a bull market? Commentators seem to be divided (as usual). Given that my investment strategy would not vary considerably whatever the conclusion, I decided that I do not need to worry about short term market timing issues to any great extent.

With at least 10 years to go to retirement (unfortunately), I am a net accumulator of assets (mainly shares and property). My investment strategy mainly involves acquiring assets which offer reasonably yields that have the potential to grow over time to counter the effects of inflation. Although the short term effect of a decline in the value of the private portfolio can be painful, if not discouraging, a more rational approach is to recognise that weaker markets provide opportuities to acquire assets at more favourable prices.

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