The pullback in shares - seven reasons not to be too concerned

Key points

  • The current pullback in shares has been triggered by worries around US inflation, the Fed and rising bond yields but made worse by an unwinding of bets that volatility would continue to fall.

  • We may have seen the worst, but it’s too early to say for sure. However, our view remains that it’s just another correction.

  • Key things for investors to bear in mind are that: corrections in the order of 5-15% are normal; in the absence of recession, a deep bear market is unlikely; selling shares after a fall just locks in a loss; share pullbacks provide opportunities for investors to pick them up more cheaply; while shares may have fallen, dividends haven’t; and finally, to avoid getting thrown out of a long-term investment strategy it’s best to turn down the noise during times like the present.

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