Sharemarkets are jittery again with news of a new Covid variant, rising interest rates and inflation.
So how should investors – especially those entering the arena for the first time through online trading platforms like Sharesies and Hatch – approach the volatility?
What protections are in place for the novice investor and how has shareholder activism evolved since the “Wild West” era of the 1980s?
These are some of the questions posed to Oliver Mander of the New Zealand Shareholders Association in the second episode of Continuous Disclosure, a new podcast hosted by the Herald’s business reporters with support from Fisher Funds.
In this episode, Mander tells Duncan Bridgeman that investors need to be resilient in the face of increased volatility.
There are a range of factors now at play, including climbing interest rates, an increasing inflation rate and aspects related to how the Covid pandemic is managed around the world, he said, noting that the while global markets have enjoyed a lengthy bull run, New Zealand has underperformed other countries over the past year.
NZ Shareholders' Association chief executive, Oliver Mander. Photo / Michael Craig
“Certainly that bull run is interesting because one of the risks we see with a whole bunch of new investors coming in is that they have only generally experienced a good time.
“We’ve had a decade or more of solid steady returns, sometimes outlandish returns… now we are seeing interest rates start to rise again, the cost of capital beginning to rise.
“So sharemarkets around the world will head into a period of volatility and consolidation. It doesn’t mean free fall, but certainly volatility is a very good word to use.
“The key word is resilience. If you’ve done your investing right, if you are diversified across multiple geographies and across multiple sectors and if you are investing for the long ter … it’s about having the resilience to ride through any of that short-term volatility.”
Continuous Disclosure is a New Zealand Herald podcast.
Continuous Disclosure is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every second Wednesday.
You can find more New Zealand Herald podcasts at nzherald.co.nz/podcasts or on iHeartRadio.