Given that there seems to be some fear amongst investors in this country, with the rand devaluing and other market factors, we asked our friends over at Consequence Private Wealth to give us their opinion. Below is what Michael Furter had to say on the share market turmoil.

We’re about 14% down on the JSE All Share index from a peak in April so the effect of the global equity sell-off has been significant here, although US futures were up late yesterday and we’re seeing a minor recovery on the JSE today.

The main question is whether this is a ‘correction’ or a major market event of the 2008 variety. We think it’s more likely the former but clearly continuous volatility points to underlying global issues. One can debate what macro events are likely causes – it may be that the really big story is long term US deflationary pressure rather than Chinese growth concerns.

But whatever the catalysts, the fact is that capital markets must endure some periods of downward or sideways movement – investors cannot expect constant price increases. The index has actually been bouncing up and down around the 50,000 mark over the last year and a bit. After 4 or 5 bull years the sideways move is not unexpected and not necessarily a bad thing either, given that the alternative may be a full scale crash, an event which can push investors into serious capital losses through panic selling.

We think two key points are worth remembering now: Firstly, you only ‘lose’ when and if you sell. Company shares and equity fund units will return value over the longer term to those who are patient. Secondly, in these conditions opportunities exist and good managers will seek them out. We’ve kept our clients appropriately balanced between sectors and have a fair amount of cash available to allocate to value assets.

That’s why we’ll always ask the experts for help, there’s no shame in admitting you’re not on top of the intricacies of the financial market.