- The Australian share market has witnessed a correction over the past month, falling by 2.4%.
- The market has slipped over 3% so far in September.
- Uncertainty over economic recovery, Fed taper, problems at Chinese developer Evergrande and COVID-19 pandemic have contributed towards this weak sentiment.
The Australian share market has witnessed a correction over the past month, falling by 2.4%. The market has slipped over 3% so far in September. The benchmark index even hit its lowest point since May at one point of time in this month.
Uncertainty over economic recovery, Fed taper, problems at Chinese developer Evergrande and COVID-19 pandemic are a few major factors that have contributed towards this weak market sentiment. As a result, concerns have increased among investors.
However, it is important for investors to hold on and not panic so as to successfully tide over the challenges posed by the weak market. Here are five key tips that could help investors during such sluggish market conditions.
Don’t fear corrections
Investors should not worry corrections much since they are part of the stock market cycle. There have been numerous instances in the past when the market sharply rebounded from lows. The most recent is the coronavirus sell-off of March 2020. The other thing to note is that September is generally the weakest month for both US and ASX shares.
Doesn’t seem like a recession
Experts don’t see the current scenario as a precursor to economic recession. So, investors need not worry. In fact, it is just a weak phase which may pass away soon. After an initial lag, the coronavirus vaccine program has picked up not only in Australia but worldwide, which promises strong economic revival going forward. The easing of Evergrande situation also seems to have allayed concerns among investors.
Look for buying opportunities
Experts advise to stick with long-term investment plans and look for further buying opportunities since valuations of stocks start getting cheap. Investors should refrain from selling their assets during such conditions. It is the time when investors can look for attractive entry points.
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Dividend shares can be looked at
Investors can also look at including dividend paying shares in their portfolio. Considering the current low interest rate scenario, dividend paying shares are good options for income investors.
Go for diversification
Investors should look for diversification as soon as markets start behaving weak. Your investment portfolio can be divided between stocks, bonds, cash, and other assets. Some funds can also be allocated to safe havens such as gold and silver.
As already discussed, investors should not panic during these weak market conditions. They should in fact look for outliers and invest in them at right prices.
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