The Tokyo Stock Price Index experienced its worst day in 37 years, and London’s FTSE 100 dropped by more than 2 percent on Monday, August 5. Phil Dragoumis, director of Thera Wealth Management, noted that market volatility in August is not unusual and should not cause excessive concern. He emphasized that nothing fundamental has changed in the markets this year and suggested that having bonds in a portfolio can mitigate volatility. Dragoumis reassured that clients are still seeing gains this year despite the volatility, stating, “The price you pay for long-term returns is volatility.” He advised clients worried about market fluctuations to reduce their equity exposure, highlighting the importance of tailored portfolios for different risk appetites.
Michael Reed of Michael Reed Wealth Management has also been urging clients to stay calm and remain invested in global equities for the long term. He highlighted the benefits of pound cost averaging for those making regular contributions to ISAs or pensions, which allows them to buy more investment units at lower prices. Reed emphasized the crucial role of advisers in helping clients avoid panic and poor decisions during market downturns.
Lindsay James, an investment strategist at Quilter Investors, warned that the volatility in Japan might precede similar fluctuations in US and European markets. Despite recent data failing to calm investor nerves, she noted that central banks have substantial capacity to stimulate growth and are expected to deploy these measures gradually to positive effect.