Since February 2018 stock markets have been generally falling across the globe. The reasons for this can be many, but a key issue is that in recent years prices have been rising steadily and, in some cases, prices are becoming unrealistic. Markets won’t rise indefinitely and these drops are most likely prices simple returning back to more realistic levels. Other reasons for the fall in markets could be related to interest rates. Rising interest rates can make bonds more attractive to investors, meaning they switch from some of the more riskier investments, which cause their price to fall. There has also been a lot of uncertainty around the world caused by political rows between countries – such as the US and China for example – and Brexit is causing nervousness for investors and businesses in the UK. Elsewhere, the share prices of tech giants such as Amazon, Apple and Facebook – usually relatively safe investments – have all been experiencing drops, with Apple’s share price in particular losing around 20% of its value.
It may be unnerving to see markets having difficulties, but remember that ups and downs are part and parcel of investing and to be expected in healthy financial markets. So the best thing you can do is ignore it all, keep calm and carry on investing.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.