Permanent loss of capital is what investors should be concerned about and not events like Black Monday, says Peter Elston, chief investment officer of Seneca Investment Managers.
Investors with long-term horizons should not be worried about short-term volatility, Seneca’s Mr Elston tells Financial Adviser’s Simoney Kyriakou in the latest video interview.
When asked what action should advisers and their clients be taking post Black Monday, Mr Elston said: “It is always dangerous to sell. When you sell you are imposing on yourself another decision to buy back.
“If you went to sleep in 2006/2007 you would wake up today and see the FTSE 100 pretty much back where it was then and you would have been reaping nice dividends over that period.
“You really wouldn’t have noticed that there had been this serious fall in markets.”
Mr Elston said dividend distributions have held well even during market dips in most sectors and this is a message advisers should give to their clients.
He also talks about how the global economy is far weaker than central banks would like them to be and recommends investors should stick with equities.
emma.hughes@ft.com
