Reasons why investors should stay positive as we begin an important week

Regardless of volatility, uncertainty and headwinds, there are still key reasons why investors should be optimistic as we begin what will be an important week.

Looking back to last Friday, China’s main stock market fell 5.5 per cent, the biggest drop since August’s crash.  As a result, the Hang Seng and other major indices felt the knock-on effect, and with the Federal Reserve’s imminent rate rise decision still in question, and escalating geopolitical factors, there are many elements causing markets to be unsettled.
The main causes of this volatility include the Chinese authorities attempting to eradicate what they consider to be suspicious trading practices, subsequently inciting a significant slide and causing ripples globally; bond yields feeling the pressure; the Fed’s likely rate hike; the oil price crash; the slowdown in China and other emerging markets; as well as the worrying global political and security issues.

It is my view that this turbulence around the world will strengthen this important week ahead and will remain for the rest of 2015.

A critical week

This week will indeed be a huge one for the markets.  The IMF is expected to grant China’s Yuan reserve currency status; the ECB and president, Mario Draghi are meeting on Thursday with hints that monetary policy could be eased further still; OPEC is meeting in Vienna on Friday to determine whether current supply will be maintained despite weak oil prices; and the U.S. jobs report is published – the final big piece of data to be considered by the Fed – the world’s defacto central bank – before a rate rise is decided.

However, despite this uncertain period, I would strongly urge investors to be optimistic and maintain a positive attitude towards the markets for two main reasons.

First, as we’ve seen in the past, market volatility generates important buying opportunities.

Generally speaking, 2015 has been a relatively good year for investors.  Several indices including the CAC40, the DAX, the STOXX 50, and the S&P 500, amongst others, are all up on year-to-date comparisons.  The FTSE is also up by 80 per cent since it fell to its knees back in 2009.

Nevertheless, cynicism is still maintaining a stronghold on prices in various sectors, creating markedly low valuations and subsequently affecting opportunities for long-term investors.

Second, investing on a global scale has never been more straightforward and cost-effective as it is now.

Indeed, investing across geographical regions is one of the main foundations of a well-diversified portfolio, and helps investors to moderate risk during market turbulence and make the most of opportunities as they arise.

As it stands, this environment is ideal for investors to consider a more global perspective.  The greater the diversification, the less the overall portfolio risk.

Therefore, savvy investors should take full advantage of current events, particularly this week, as important buying opportunities can develop both at home and around the world.

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