May was a game-changer. So much happened!
UK Prime Minister Theresa May resigned.
May had resisted resignation for quite a while. However, her most recent effort at a Brexit deal, and possibly a second referendum, triggered an upheaval in her own party. Her resignation opens up a Pandora’s Box of ambiguity and insecurity about what will happen in the UK.
The US-China trade talks dissolved.
The US may have finally pushed China a little too far, and it is uncertain whether China will return to negotiations under the given circumstances. Many are saying that the US should not underestimate China’s ability to fight back in the trade war.
North Korea fired missiles.
North Korean missile tests occurred in early May. The last time this occurred was in late 2017. These tests violated United Nations resolutions. These events again causing volatility in the stock markets.
The US promised to impose tariffs on imports from Mexico.
The tariffs are planned to begin June 10. They will start at 5% and increase over the coming months to 25%; unless Mexico improves its execution of immigration policies. These announcements caused some significant downturns in capital markets.
Conclusion
Markets are nervous and are indicating a high level of fear. Some analysts are stating recessionary signals. However for many investors, this is again posing to be a prosperous buying opportunity.
Investors with diversified portfolios containing high quality investments, and longer-term time horizons, should not feel panicked by the current situation.
This uncertainty is creating an environment for valuations to come back to normal levels and even trade at a discount. Which means the time to invest your excess cash is during these market dips.
The key though, is high quality investments. Your portfolio must be built utilizing high quality institutional managers. Given the market risk, you do not want to add further and unnecessary risk to your portfolio. On the contrary, you want to take advantage of the current situation and grow your wealth!
Best,
Najia