Worried about market volatility? GSFM’s first contribution to AdviserVoice for 2016 looks at long/short investing and how such strategies can help investors survive rocky markets.
Welcome to 2016, where headlines scream about the prospect of bear markets, accompanied by images of screens showing an endless sea of red. Global markets are concerned about a trifecta of higher rate expectations from the end of US quantitative easing (QE), a China meltdown causing risk-off contagion, and the possibility of a commodity crash causing broad issues in credit markets.
The Australian market has experienced significant volatility so far this year and this seems set to continue. In a ‘risk-off’ environment, the companies that suffer most tend to be resources and financials, which, in combination, comprise more than 60% of the S&P/ASX200 Index (ASX200).