Ålandsbanken Fonder Exec Urges Long-Term Investing Amid Market Swings

Ålandsbanken Fonder's Head of Equities, Lars Söderfjell, advises investors to prioritize a consistent, long-term investment strategy amidst market volatility, according to Dagens industri. Söderfjell cautions against impulsive decisions driven by headlines regarding stock market downturns, inflation, or interest rate hikes, as these reactions can lead to detrimental financial outcomes. He observes that investors frequently amplify stock holdings during bull markets and execute panic sales during downturns, underscoring the inherent risks of market timing. Söderfjell recommends aligning investment actions with one's pre-determined risk tolerance, emphasizing the importance of defining this tolerance prior to periods of market turbulence. He stresses that consistency, rather than passivity, is paramount. Investors should predetermine the allocation of their portfolio to volatile assets like stocks, choosing a percentage (e.g., 30%, 50%, or even 100%) that corresponds to a level of risk with which they are comfortable. Furthermore, Söderfjell discourages altering portfolios in response to short-term market fluctuations, labeling market timing as "extremely difficult" for both seasoned professionals and individual investors. He advocates for establishing and maintaining a long-term investment plan, citing historical evidence demonstrating the stock market's resilience and its ability to recover from substantial declines. The central message underscores the necessity of consistency and a well-defined risk tolerance for successfully navigating periods of market instability.