If you have been catching news headlines over the past few weeks, you would be forgiven for thinking the world is on the verge of imploding.

Inflation is at multi-decade highs, Central Banks are rapidly raising interest rates, there appears no end in sight for the war in Europe, and the probability of a recession in 2023 is rising.

To make matters worse, financial markets have been in free fall since the beginning of the year mainly because of the incompetence of Central Banks over-stimulating the global economy during the Covid lockdown, making an incorrect assumption about the transitory nature of generational high inflation, and then significantly lagging the yield curve when it came to raising interest rates.

However, as someone who talks about money for a living, I’m aware that, historically, markets have recovered from corrections. And yet, when markets become unpredictable like they have been this year, we sometimes find ourselves doubting that basic investing principle. Human nature tells us that difficult markets often lead to emotional decisions that might not be in our financial best interest.

An uncertain and volatile economic backdrop is one scenario where the intrinsic value of a Convergence Wealth financial adviser is unlocked. We are an informed and sympathetic sounding board for many clients. Our calm, extensive experience in different market cycles, and informed guidance is usually very helpful. We remind clients about the long-term strategy for pursuing their life goals – one that is aligned with their risk tolerance, liquidity needs and time horizons, and that includes diversification so that losses in a downturn are minimised.

That said, our house view right now is that we are approaching the peak in negative sentiment. We are not there yet but we are close. However, we believe the correction in financial markets has now provided an opportunity to take a more constructive view on equities and investment grade quality fixed interest assets. Please reach out if you think we can help you or your investment portfolio.

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