Buy, buy, buy!

Michael Hutton

Instead of panicking and selling the free falling assets of their portfolios, savvy investors should take advantage of the bargain stocks currently available and buy before the market goes back up, according to HLB Mann Judd financial planning partner Michael Hutton.

Hutton’s commonsense approach to investing preaches that by cashing in stocks after a substantial drop has already occurred and then re-entering the market when the situation has returned to normal, many investors risk losing a substantial amount of money.

Instead of fretting, Hutton believes investors, particularly new ones with small starting balances, should be rejoicing at the cheap prices now on offer.

He cited a 29 per cent drop in the price of BHP shares since November last year as a good example of the opportunities that are available to smart investors.

However, he added that people invested in a sensible cross section of quality managers and stocks in the first place, who have maintained diversification and an appropriate weighting to different asset classes, should leave their portfolios alone and simply ride out the current wave of volatility.

“The most appropriate thing for a long-term investor to do is construct a quality portfolio and ride through the highs and inevitable lows, with a bit of rebalancing and upgrading of assets along the way,” he said.