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What to do as the Dow Jones approaches 20,000

21 December 2016 |Latest news

What to do as the Dow Jones approaches 20,000

21 December 2016 |Latest news

With the Dow Jones Industrial Average approaching 20,000 and the ASX All Ordinaries Index reaching its 12-month high, many investors are wondering what they should do from here. Some are wondering if they have missed the run, others are asking if they should take profits at these levels.

The short answer to these questions is that investors should do little different as a result of this milestone level. This is a timely moment to remind investors of a basic but often forgotten quality of investing. Investors should continue to invest with a longer term outlook rather than trying to time the market.

Whether investors enter the market here or if they should take profits here has nothing to do with these milestone numbers. Instead investors should keep in mind things such as the timeframe of their financial goals and their tolerance to investment volatility.

Those saving for a distant goal, such as saving for retirement or their children’s education should look to start investing right away. For those who are aiming to retire soon, they could consider decreasing exposure to growth assets if a short term shock could be detrimental to their retirement goals. Investors could also consider rebalancing portfolios from asset classes that have appreciated into other asset classes to ensure the mix is still in line with their risk profile.

Too many investors are tempted to buy the market during bull markets but flee the market during a correction. This results in buying high and selling low. Instead, investors should keep in mind things such as their investment time horizon and the tolerance to ride market ups and downs. It is better to have a rule based investment approach than to make investment decisions based on emotion.

Things you should know

Gearing involves risk. It can magnify your returns; however, it may also magnify your losses. Issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). Information is general advice only and does not take into account your personal objectives, financial situation or needs. The views of the author may not represent the views of the broader Bendigo and Adelaide Bank Group of companies (“the Group”). This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. You should consider whether or not the product is appropriate for you, read the relevant PDS and product guide available at, and consider seeking professional investment advice. Not suitable for a self-managed superannuation fund.

Examples are for illustration only and are not intended as recommendations and may not reflect actual outcomes. Past performance is not an indication of future performance. The information provided in this document has not been verified and may be subject to change. It is given in good faith and has been derived from sources believed to be accurate. Accordingly no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correction of the information and opinions contained in this article. To the maximum extent permitted by law, no entity in the Group, its agents or officers shall be liable for any loss or damage arising from the reliance upon, or use of the information contained in this article.

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