Use Economic Fear As Your Motivator to Plan

18 August 2020
While the future of COVID-19 and the economic outlook is fairly uncertain, now is the time to be planning your investment strategy. Chief Analyst, Dale Gillham, from Wealth Within explains in this article.
This year the world has been thrust into turmoil with growing fears around the full effects of the COVID-19 pandemic. Concerns are not just about our health, although understandably this is our immediate focus, but also the growing concerns among ordinary Australians around the global economic climate and how we can secure our future, not just personally but as a nation. Right now, our security and safety are being challenged and these basic physiological needs have to be met in order for everyone to move forward as I explain in this video.

There is an old saying that every cloud has a silver lining, but is the current situation right now really a silver lining? In my opinion, nothing gets people more motivated to change than fear and uncertainty, and you must admit, COVID-19 has certainly created a lot of that. Australians are experiencing a fear of the unknown because of the unpredictable nature of the current global situation. While we can all guess, no one knows exactly where we will be in 12 months’ time and what our personal lives will look like.

In the current situation, more Australians are starting to pay attention, but, more importantly, they have become motivated to ask some tough questions. I am not just talking about health-related questions but questions about where their money is invested, what they should be investing in and how safe is that investment. Over the past few months, I have been inundated with Australians asking those exact questions in addition to wanting to know how they can profit more from the stock market, so they can secure an income stream if the climate does not improve.

So what questions are you asking and what answers are you getting in relation to your investments, so that you can secure your future? Because, right now, it’s important to understand your level of exposure to Australian equities, particularly if the stock market crashes again, as some experts are predicting. It is far better to take positive action and be armed with a plan before something occurs rather than acting on fear, as this reduces much of the uncertainty we have been experiencing in 2020.

The one thing that is certain is that the dark clouds will continue to roll in from time to time, but the opportunity for you is how you handle them. Making a choice to pay attention and become educated, and informed with a solid plan is not only wise, it will also ensure you will be confident about what to do when this occurs. In other words, it is far better to be educated and informed before the clouds appear rather than after.

So what are the best and worst performing sectors this week?

While the All Ordinaries Index has been slightly bullish so far this week, it is far from convincing. As such, some sectors have risen strongly while others have not performed that well. Consumer Staples has led the way up over 4% followed by Financials up over 3%, while Consumer Discretionary is currently up almost 2%.

The worst performing sectors include Communication Services, which is down nearly 5% followed by Utilities down around 2% and Information Technology down over 1%.

Looking at the ASX top 100 stocks, the best performers so far this week include Treasury Wines Estates, which is currently up over 17%, Flight Centre up over 15%, while Scentre Group and Unibail-Rodamco-Westfield, both of which are up over 10%.

The worst performers include Northern Star Resources down over 11% followed by Seel Limited and AGL Energy, which are both currently down over 8%. Telstra and Challenger are also both down over 7%.

So what’s next for the Australian share market?

On Monday, the All Ordinaries Index rose 1.66% and it looked like the market would finally break out of the protracted sideways move it has been in over the past few months. However, being patient has paid off given that over the past two days the market has experienced some weakness yet again.

Last week I indicated that the big end of town did not seem to be overly bullish and the events of this week have done nothing to change my view. For the Australian market to prove it is bullish, it needs to close strongly for the week, preferably above 6,200 points. Failure to do this continues to indicate that the market is weak and will fall away sometime soon.

For now good luck and good trading.

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Dale GillhamAbout Dale Gillham 

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice.

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