Investors should “buckle up” as markets are likely to be volatile in the first quarter of 2024 and could drop by up to 20% – but you could find there are more opportunities to make money, affirms the CEO of one of the world’s largest independent financial advisory and asset management organisations.
Nigel Green of deVere Group’s comments come after a rocky start to the year for markets.
China and Japan led losses in Asia-Pacific on Thursday, European stocks are heading for a mixed open, and U.S. futures were little changed after Wall Street stock indexes ended the second session of the year down again.
The deVere Group CEO says: “Global markets have been spooked since the start of 2024, and there’s little sign that volatility will be reduced any time soon amid uncertainty regarding central bank rate cuts.
“Arguably, the main trigger currently is minutes of the U.S. Federal Reserve’s meeting in December, which showed interest rate cuts were possible this year, but they provided almost no definitive indication on when – of if even – that might happen.”
“With the ongoing lack of clarity from major central banks, including the Fed, we would not be surprised to see markets falling into correction territory this quarter. As such, investors should buckle up for more turbulence.”
A correction is typically defined as a decrease of at least 10% but less than 20% from the most recent high. Corrections are a common occurrence in financial markets and are considered a natural part of market cycles.
Nigel Green says that a potential correction could provide investors “even more opportunities” for build wealth, with the right advice.
Corrections help markets maintain a balance by preventing excessive speculation and unsustainable price increases. They provide an opportunity for overvalued assets to readjust to more reasonable levels,” he notes.
“Investors use corrections as opportunities to reassess their portfolios, reallocate assets, and position themselves for potential future growth. Many see corrections as buying opportunities, especially if they believe the fundamentals of the assets remain strong.
“Those who pay attention to them often use them as signals to review and adjust their risk management strategies. It prompts them to ensure that their investment portfolios are well-diversified and aligned with their risk tolerance.
The deVere CEO concludes: “The potential for increased market volatility and up to a 20% drop in markets serves as a call for investors to prepare for a bumpy ride.
“However, within this turbulence lies important wealth-creating opportunities for those who approach the market with a strategic mindset.”