TALKING FINANCE with Justin Baiocchi of Baiocchi Griffin Private Wealth Keep on keeping on While we would all prefer that the share market does nothing but move upward, a hard reality to accept as an investor is that sometimes this doesn't occur, and the value of your investments can decline. Unfortunately, this past week has proven to be one of those market downward occasions, with the fall unfortunately being severe enough to earn the title of "correction". In other words, there has been a decrease in the value of the share market of 10% or more. The next jargon event to follow a correction is a "bear market", which occurs when the share market falls by 20% or more. As at the time of writing, this has yet to occur for the Australian share market, but it has taken place in the US. Is this concerning news? Yes. Is this something we wish upon ourselves? No. Should we be panicking and selling everything? Certainly not. As I said, while we wish for the share market to only increase in value, this is simply not guaranteed to occur. While there is opportunity in every challenge, with a market decline presenting a good opportunity to begin your investing journey or to add some quality companies into your portfolio at a bargain price, if you are already invested in the market, you are probably feeling quite nervous right now. Our natural reaction at a time like this is to panic, with the selling down of shares to cash seeming like the appropriate course of action. With the media using terms like 'carnage', 'bloodbath' and 'wiped off' when reporting on the matter, a reaction like this is quite understandable. However, panicking is potentially one of the worst things that you can do. When it comes to calculating your investment's performance, the only two crucial and relevant sets of data are the date and the price at which you bought the asset for, and the date and price at which you sold it. Anything that happens with the price in between these two dates does not have a bearing on your success with the investment. That is, the gain (or loss) is only hypothetical and not actual, or in jargon terms, the gain (or loss) is unrealised. Therefore, if you panic and sell at the first sign of a downturn, you are likely to turn the only hypothetical loss into an actual loss, and this is irreversible. If you maintain your position, there is the reasonable possibility that the hypothetical loss will recover back into a hypothetical gain. Maintaining the course and riding out the downturn takes real discipline and is far easier said than done. However, in amongst their doom and gloom reporting, there is a reason that the media frequently include this very advice from investment experts in their coverage - it works! BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin Find us on f Facebook facebook.com/BaiocchiGriffin Private Wealth www.bgprivatewealth.com.au AW7431081 TALKING FINANCE with Justin Baiocchi of Baiocchi Griffin Private Wealth Keep on keeping on While we would all prefer that the share market does nothing but move upward , a hard reality to accept as an investor is that sometimes this doesn't occur , and the value of your investments can decline . Unfortunately , this past week has proven to be one of those market downward occasions , with the fall unfortunately being severe enough to earn the title of " correction " . In other words , there has been a decrease in the value of the share market of 10 % or more . The next jargon event to follow a correction is a " bear market " , which occurs when the share market falls by 20 % or more . As at the time of writing , this has yet to occur for the Australian share market , but it has taken place in the US . Is this concerning news ? Yes . Is this something we wish upon ourselves ? No. Should we be panicking and selling everything ? Certainly not . As I said , while we wish for the share market to only increase in value , this is simply not guaranteed to occur . While there is opportunity in every challenge , with a market decline presenting a good opportunity to begin your investing journey or to add some quality companies into your portfolio at a bargain price , if you are already invested in the market , you are probably feeling quite nervous right now . Our natural reaction at a time like this is to panic , with the selling down of shares to cash seeming like the appropriate course of action . With the media using terms like ' carnage ' , ' bloodbath ' and ' wiped off ' when reporting on the matter , a reaction like this is quite understandable . However , panicking is potentially one of the worst things that you can do . When it comes to calculating your investment's performance , the only two crucial and relevant sets of data are the date and the price at which you bought the asset for , and the date and price at which you sold it . Anything that happens with the price in between these two dates does not have a bearing on your success with the investment . That is , the gain ( or loss ) is only hypothetical and not actual , or in jargon terms , the gain ( or loss ) is unrealised . Therefore , if you panic and sell at the first sign of a downturn , you are likely to turn the only hypothetical loss into an actual loss , and this is irreversible . If you maintain your position , there is the reasonable possibility that the hypothetical loss will recover back into a hypothetical gain . Maintaining the course and riding out the downturn takes real discipline and is far easier said than done . However , in amongst their doom and gloom reporting , there is a reason that the media frequently include this very advice from investment experts in their coverage - it works ! BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin Find us on f Facebook facebook.com/BaiocchiGriffin Private Wealth www.bgprivatewealth.com.au AW7431081