Won't Panic Selling Falling Shares Just Increase Insurance Premiums?

There are several problems with that sort of thinking, though, according to NoClaimsDiscount.co.uk [http://www.noclaimsdiscount.co.uk]:

Personal losses: Selling into a falling market will probably mean, by definition, that the seller will incur a loss on shares sold.

Forgoing gains: Over the last 100 years, the trend for both British and global bourses has been up. By selling now, shareholders may miss out on these gains. Naturally, buying back when the markets rise again will result in having to do so at a higher price.

Effects on insurance premiums: Each shareholder is obviously not the only person in the stock market. The insurers also heavily invest in it. In fact, many British insurers rely on investment income to offset underwriting losses so stock market losses themselves directly affect insurer investments. When stock markets fall in the face of underwriting losses, insurers are pressured to increase premiums to survive.

A caveat here is that this is a financial model, not a crystal ball. Like any other prices, both shares and premiums are based on innumerable factors and events. However, the fact remains that insurers are taking big losses on investments and when shares are sold, whether in the insurer themselves or just generally, this contributes to those losses. The combined selling of millions of small investors could, at least theoretically, have the result of increasing premiums.

Remember, media entities grow and/or profit by attracting viewers or readers. The more sensational the news [ http://www.noclaimsdiscount.co.uk/news/], the more attraction they gain. Individuals should educate themselves as much as possible on critical terms such as "recession" or "credit crunch" and such. They do not mean financial collapse or mass poverty. For every economist who says that the financial roof is falling in, there are often 2-3 who say that the current situation is a great investment opportunity.

The decision to buy or sell shares is a tremendously complex one, and involves each person's own investment goals, current financial situation, and expectations. Individuals should consider the broader and long-term implications of any decision regarding their overall financial situation and all the financial products, including insurance [http://www.noclaimsdiscount.co.uk/insurance/]. Consider, too, the strong performance theLondon bourse has put in over the last few decades (often beating outNew York), before we all start to sell our shares purely as the result of media influence.

SOURCE NoClaimsDiscount.co.uk

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