Anybody attempting to keep up with the markets since the New Year will have been very busy. Oil prices have been turning round even slower than the tankers that carry the stuff and some equity indexes…well. There is so much noise about this, but which lane of traffic do you follow? One side says ‘the end is coming and it is time to sell all your stocks’, where the other side say ‘now is the time to jump in and buy anything that is cheap’. Let’s look at these two schools and see when you should follow them.

The main aspects of any investment plan is what timescale you are looking at and the risk that you are willing to take. If you are only looking at your investments in the sense of pure monetary value, you are speculating rather than investing. Attempting to time the market value is an extremely dangerous thing to do and should only be done by those who have a higher threshold to risk over a short period of time. So if you relish a downturn in the markets, and think you see some value, then yes, it is time to buy more.

Now volatility comes into play. When you see a graph with a squiggly line on just about anything related to finance, you will see how it is never smooth; it goes up and down. The more the line moves up and down, the more volatile that thing is. More volatility = more risk. If you are not happy with the risk, you will have sold out of these stocks long ago, and if you haven’t sold out yet, you are not going to.

What if you are just starting to look at investing? Firstly, understand what the different types of risk are and how you can use your own tolerance to it. Also, look at the reasons that you are investing for, and the ultimate goal. Find things to invest in that fit for you, not the other way round, and if you still can’t find anything, start looking away from the normal options. There are funds out there that specifically look to lower your risk with the type of investments that naturally do well in difficult periods of time. Have a look out for funds that pay high yields (returns), dividends that pay directly back into the fund, or a Special Situations fund such as one from MitonOptimal. Both of these types of fund are designed for this situation and are easy enough to buy into and sell out of when the market conditions, or your conditions, alter.

Paul McLardie is a partner at Total Wealth Management. Contact him at