As 2011 draws to its close, investors will be reflecting on the past year as they monitor the value of their portfolios and prepare for 2012. After a whirlwind year on the financial markets, many investors may be wondering whether to stay in the market or sell some of their equities and ride out the next year or eighteen months.
The past year saw financial markets yo-yo as the Eurozone debt crisis and a slow recovery in the US economy cast doubt on global growth. With the possibility of a recession in Europe, and continued slow growth in North America, some investors see shares as a poor bet moving into 2012 – if you share this view it may be time to sell and opt for safer investments like cash, bonds, or gold.
Taking a more positive view of the market’s prospects for 2012, a recent poll of dealers and stock analysts conducted by Reuters showed that on average, a 10% rise was expected in South African shares. This contrasts with the negative outlook that applies to many markets in the developed world, and could mean that investors should think carefully before exiting the market just yet.
Investment analysts believe that if the Eurozone manages to solve its debt crisis, an issue that has the full attention of some of the world’s top financial minds, and if the US continues its slow but steady recovery the value of South African stocks will rise as the demand for commodities increases. In this scenario, South African shares would prove to be an attractive investment.
As with any investment, the returns you could earn on shares are not guaranteed. The past few years have also seen large swings in the market, and the risk always exists that investors who rush in to buy shares at this point may not make large gains – losses may even be on the cards for some.
If you’re keen to invest in shares and would like some advice on your portfolio, speak to your financial advisor who will work with you and your broker to streamline your investments, balancing risk and return to allow your net worth to increase in these uncertain times.