Market volatility is normal, and can even present buying opportunities.
That’s how Barry Morrison, CEO of Aston Hill Institutional Partners, views current market conditions.
“I’ve been in the business since April 1968. Markets have always been volatile,” he says. “I remember when I first got into it, the stock market went down about 70% in nine months.”
Over the last two months, he adds, “we’ve had a complete economic and market cycle. And meanwhile, in the real economy, nothing is really changing.”
The upside is corrections and bull markets clean out excesses in the market, so “volatility equals opportunity to me,” says Morrison. “We’ve been able to replace a lot of the stocks we sold earlier in the year at higher levels at much lower levels. [This is] one of the best investment environments I’ve seen.”
And he remains bullish. “We could have two to three [more] years of good markets. The combination of a growing economy, no inflation and low interest rates is a dynamite recipe for the stock market going forward and [for higher] corporate profits.”
Still, he has one warning for bond fund investors: monitor a fund’s unit value over time. To do this, routinely find out whether it’s “paying out too much, and [is that] eroding the capital value of the fund?” He adds his fund could have started paying out more, but he didn’t want to have to lower distributions later.