Over the last week, many of you may have noticed that the US market has been playing silly buggers on your share portfolios. This isn’t a time to hit the panic button and sell off everything. As I have said over, and over again, the market will have its ebbs and flows and that’s why our Fearless Female Traders don’t recommend the notion of ‘Speculating’. One off purchases based on a hunch or to make a quick buck (cough, cough, Bitcoin) is based on speculative behaviour (this is not a good thing) and it’s moments like these, you will lose a lot of money. If this is the first time you’re joining us, we’re not the kind of folk who sit at home in a dark room surrounded by computer screens and confusing graphs. We’re women who want a better future. And that future includes financial freedom.
RELATED: Read our Founder’s Blog on becoming a Fearless Female Trader and discover what you actually want to achieve, when you cut out the BS and fantasies. This may include saving an extra 5% of your income each month, finding ways to cook more at home, paying off your credit card debt, or making your first (or second, third, fourth) share market purchase.
Keeping a long-term view with regular investments allows you to hedge against these moments and continue to build your wealth over a period of time. Since my initial investment 3 years ago, I have made a 17% return. SEVENTEEN PERCENT! I add to my portfolio at regular intervals and avoid looking at the gains and losses each day. This would drive me bonkers!
If you have felt a small hiccup in your earnings this last week, there’s no need to lose sleep over it. Trust me. But insert disclaimer [here]!
Some of you may not have shares (yet) but are still interested in knowing why our markets do the things they do. After all, it can be hard to get our head around the movements of an intangible thing with its own language and acronyms. At moments, it doesn’t even seem real.
Let me explain.
Since the great crash of 2007 – if you need a refresher in 90 mins, watch the movie ‘The Big Short’, it’s got all the goodness with humour and Hollywood – the US market has risen from the ashes and come back with a vengeance. Until last week, it had grown to 88% higher than its pre-cash value and 300% higher than its lowest slump during the crash. EIGHTY-EIGHT PERCENT! For those of you just joining the share market game, this is HUGE!
Unlike Australia, the US market has continued to grow since the infamous election of Donald Trump for two reasons,
- Central banks in Europe, the US and Japan reduced interest rates to almost zero, and
- They all decided to print a sh*t load of money – that is, cash money
Like a perfect storm, or in this case, a perfect rainbow, interest rates went through the floor, money flooded the market and the value of property and shares started to rise. And old mate Donald Trump was patting himself on the back, touting that the share market is a better reflection of his popularity than the polls. What a silly man.
Enough of US politics, my head goes dizzy every time I attempt to understand it!
Back in the land of Kangaroos and sausage sangas, the Australian market hasn’t progressed as much as our US counterparts. And in a way, this is because we didn’t partake in the same market-inflating activities as Europe, Japan and the US. Since the 2007 crash, the Australian market has only crept back up to 10% less than pre-crash value.
Generally speaking, our market is fed by housing and mining. Our obsession with property is like no other and as a result the ongoing low interest rates have had a knock-on effect. Since the initial boom of housing prices in Sydney and Melbourne, the property market has now officially ‘cooled’. Property developers have taken notice and are hitting pause on a significant number of apartment buildings in almost all states. If you stand on one of the hills in Brisbane – hint, there are many – you can see endless half-built complexes and count up to 20 cranes basking in the sunshine, not doing anything.
It’s not all bad though. Like any drop in the Dow Jones, the lingering PTSD from the 2007 crash seems to push every investor back into their default panic position. As most of our superannuation is locked up in the share market, people find this panic position a lot faster then they used to simply because of the effects we all felt after 2007. The thing is, whilst the Australian market is growing at a slower rate than that of the US and Europe, we’re still growing. And that is the most important thing to remember.
RELATED: “In this day and age, we’re all looking for the next fix for a bangin’ bod or tighter booty. Society and social media are incredibly cruel and unfortunately too many of us fall into the marketing traps of the next boot camp or Instagram bikini body challenge. So as the end of the year celebrations were winding up wind up, I started thinking about my finspiration for 2018.” Read on for our TOP 2018 FINSPIRATION TIPS!
I’ll say it once and I’ll say it a thousand times, you don’t invest in the share market to make a quick buck. You invest in the share market with a long-term goal of growing your wealth so you can sit back on an island post retirement sipping on cocktails. There will be moments where the value drops, and the market doesn’t continue in an upward fashion each day but if your overall growth since your initial investment is positive, that’s all you should be worried about.
Don’t panic. Leave your money exactly where it belongs – in the share market!
Fearless Female Traders