Ålandsbanken Fonder Exec: Stick to Investment Strategy in Volatile Markets

Lars Söderfjell, Head of Equities at Ålandsbanken Fonder, advises investors to adhere to a consistent investment strategy, particularly when navigating market volatility caused by inflation and rising interest rates. He cautions that emotionally driven reactions to market fluctuations often lead to suboptimal investment decisions, such as increasing stock holdings during bull markets and selling during downturns. Söderfjell recommends that investors determine their risk tolerance and establish an asset allocation strategy prior to market volatility. He highlights the importance of defining a comfortable allocation to volatile assets like stocks, suggesting equity allocations of 30, 50, or even 100 percent, based on individual risk profiles. The paramount goal is to maintain a risk level that provides investors with confidence, even during periods of market decline. Söderfjell discourages adjusting portfolios in response to short-term market movements. He asserts that market timing is exceedingly challenging, even for seasoned professionals, and that a long-term investment plan, consistently followed, yields better results. Historical market data supports this approach, demonstrating the stock market's resilience and its capacity to recover from substantial downturns. Ultimately, Söderfjell’s guidance underscores the value of proactive planning and disciplined emotional control in effective investment management.