Don’t get Trumped by fear

by James Chu
Don’t get Trumped by fear

Your humble author is not a political analyst, yet the latest war of words between America’s Donald Trump and Kim Jong-un in North Korea has experts wondering what their end game is.  Regardless of what these experts think, the fear level of the market has increased.

As daunting as it sounds, one of the best recommendations is to invest when fear dominates the market. A good measure of the level of fear in the market is the Chicago Board Options Exchange Volatility Index, also known as VIX. The chart below shows the VIX index (white line) with the global stock market index, called the MSCI World Index (green line), over the last five years. As you can see, the peaks of the VIX index coincide with the bottom of the MSCI World Index.


Source: Bloomberg

The VIX index has now surged to a new high. Unless one thinks the world is going to end, the current market fear may represent a good opportunity for long-term investors.

Apart from simply buying an index fund on the MSCI World index, there are other possibilities.

We have often heard that gold is a safe-haven asset, and performs well when most investors take a “risk off” attitude. You don’t need to buy gold bars. There are exchange-traded funds that are backed by physical gold which you can invest in. An example is the ETFS Physical Gold fund. This fund can be held in stocks and shares ISAs, which investors can include as part of the diversified portfolios in their ISAs.

Many of you may agree with the evidence in the chart above, but still have doubts. Your humble author would recommend that you look at what our structured products team has been posting recently (see here and here). Many of Reyker’s structured products have defensive strategies from which investors can benefit even if the market drops. These fixed term investments have additional protection to the capital if the underlying indices do not drop more than 40% at maturity. Simply stated, you can put your money to work and be able to sleep at night.

Our investment and dealing team is available every day to help you. We have ideas and knowledge in a wide range of investments that would suit your requirements. Instead of getting worried by constantly reading the press (and Trump’s tweets for that matter), why don’t you call us at 0207 397 2597 or drop us an email at It’s time to turn market fear into good investments.

James Chu

James Chu

James is Director of the Markets and Investments Team at Reyker. A CFA member and industry expert, James specialises in Structured Products, derivatives and development of service offerings for Reyker. A face at most industry events, James is sure to provide insight into some of the most controversial topics in the market today.