Financial markets have had an exceptional start to the year. In just a few months, they have recovered a significant portion of the ground they lost during the fourth quarter of 2018, which saw every sector decline in value. In 2019, we are seeing the exact opposite: American indices (S&P 500, Dow Jones, Nasdaq), MSCI World, emerging markets, and even European indices, have all seen a consistent upward trend since January 1. In other words, the answer to ‘which sectors are standout performers so far this year’ is, more or less: all of them.
Despite this strong performance, some sectors are faring better than others – and there is still a lot of ground to recover before markets hit their 2018 high points. It is situations like these – when a number of businesses with solid long-term investment theses are effectively trading on a discount – that opportunities exist to be capitalised upon.
By the end of October 2018, when the S&P 500 had decreased -6.94% to 2.711 points, an opportunity presented itself for investors to increase the amount of money they held in equities. By the end of November, when it had grown by 1.79% to 2760 points, that was still true. And by the end of December 2018, when it declined to 2506 points, another opportunity emerged.
In these cases, the role of the financial advisor is fundamentally important. We suggest that, where appropriate, clients make the most of these opportunities by committing to a monthly savings plan and trust in Dominion’s long-term investment strategy. The results show that in October, investors had the opportunity to buy at a 6.94% discount; in November with a 5.28% discount; and, in December, with a 13.97% discount.
Dips in the market always provide you with a chance to buy things of value at discounted rates – provided you have a regular contributions account, or when you have the capacity to make additional investments. These are the entry points our clients use to supercharge their returns in the long term.
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