"DON'T PANIC, MR MANNERING!"

The stock market is all over the place.  Brokers don't know if it's Good Friday or Christmas Day.  It's chaos.  Up 2% today; down 3% tomorrow; bouncing back the next day.  What is going on?  How can any sensible person invest in shares when markets are so incredibly volatile?  Well, to coin a phrase, "Calm down, dear".

Think about why you invested in the stock market in the first place and what your overall objective is.  The first thing to remember is that you haven't suffered a loss on your portfolio until you sell something.  If you're not desperate for the cash, sit tight.  It's not a good time to sell shares when the market is fluctuating between despondency and panic.   On the other hand, it might be a good time to buy.  I've quoted Warren Buffet before and I'll quote him again: "Be greedy when others are fearful and be fearful when others are greedy".

Think about what you want to achieve from your stock market investments.  For many of us the most important thing is income.   If this is your priority then you need to be looking at companies with a history of good dividends.  There are many companies paying in excess of 4% dividends year after year.  Let's take some examples:  BAE Systems is paying a trailing dividend of 6.44%.  National Grid is paying 5.83% and Vodafone 5.48%.   The fact that their share price might have fluctuated dramatically on market sentiment does not alter their fundemental business model.  They don't become bad businesses overnight, and the chances are that they are going to maintain their dividend policy.

If you are looking for long-term income that beats the ridiculously low money market rates, then seek out good solid companies paying a sensible dividend and ignore the fluctuations in the share price.  Let your children worry about the capital gain or loss, what we want is income to supplement our pensions and to hell with the price of the shares.

Be well.