Stockmarket slide on 6 February 2018 - what happened?

The following things happened to stockmarkets on 6 February 2018:

• Australian shares fell 3%. International shares fell between 4 and 6%. Listed Property fell 1.5% however bond values rose by 0-1%.

• Over the last 12 months (including income), Australian shares have returned 12%, International Shares between 12-20% and Listed Property around 7% and bonds between 2.5%-4.5%.

• Growth style portfolios have returned 10-12% in last 12 months (long term average closer to 8%). Defensive to balanced style portfolios have returned 6-8% (long term average closer to 6%).

The rise in bond yields following a leap in US wage growth and inflation triggered this correction to sharemarkets that has flowed globally. US markets haven risen a lot in recent times so this correction was kind of expected at some point.

Note a correction is technically a 10% fall in sharemarkets and the last correction was 2 years ago with Brexit. The 10% was recouped in 2 months.

This event is not the same entirely to Brexit however the key to investing is staying disciplined and focused with diversification and a long term plan. There will be more volatility in the next few weeks as confidence is sapped (perhaps there has been overconfidence at times by markets).

Our general advice is not to panic and stick to your plans and with ongoing communication these long terms plans can be refined. This advice has been proven sound as since this date, markets have returned back to where they were (subject to the underlying holdings).

For further information please contact your RCB Advisors team member.