Financial Agility

There is no doubt that financial markets and the world at large, have been experiencing unprecedented times in the past few years. Financial markets have been affected in recent times by a multitude of factors including a global pandemic, war, and rising inflation. Many of us as investors may have been affected at one time or another by only one of these factors but have never experienced the combined effect of all these factors at play simultaneously.

The effect on financial markets has been volatility and uncertainty across all asset classes. This has been evident in stock and bond prices, real estate prices and even commodities prices such as oil and gold. The volatility and uncertainty often make us question where to invest, and if we should remain invested in what we currently hold. The questions that come to investors’ minds include, “Will the markets go lower?”, “Should I liquidate my investments?” and “Are there any safe ways to invest during these times?” The truth is that markets have always fluctuated. Not necessarily at the rapid pace and frequency being seen currently but looking at the markets over long periods will show fluctuations in all asset classes.

Volatility can be scary for the investor, but they can also present investment opportunities. The truth is we must exercise greater financial agility in these times to capitalize on opportunities. When asset prices fall, proper analysis can determine if an asset is now undervalued. Finding undervalued assets presents a buying opportunity for the investor. When markets return to normalcy and external factors become less of an influence, the undervalued asset will increase in price to a fair value. This will transpire into profits for those who were able to purchase the undervalued assets.

To take advantage of some of these opportunities, preparation is key as investors will need to be able to move quickly when the opportunities arise. Agility is necessary as most of the opportunities may only be available for a very limited time. Holding some cash or cash equivalent assets can allow you to capitalize on opportunities quickly. Funds can be held in a repurchase agreement which gives a better return than a savings account with the same flexibility. The investor can quickly liquidate and deploy funds to longer term assets which provide greater profit opportunities.

During these uncertain times, opportunities arise in all asset classes. Be ready to take advantage when they do. Speak with your financial advisor to get sound financial advice when making these decisions. This can ensure that your investment will be a profitable one even during these times of volatility and uncertainty.

Dwayne Neil, MBA, is the AVP, Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm Feedback: if you wish to have Sterling address your investment questions in upcoming articles, e-mail us at info@sterlingasset.net.jm.