In these tough times we hope that the following medicinal tips offer some comfort.
The COVID-19 Crisis has been likened to the market crash caused by the 9/11 attacks, albeit on a wider scale. There is no doubt that the virus itself will be beaten and subside, but what the pandemic has unveiled is the savings crisis, which we as advisers have been aware of for some time. (Yes, we can be pushy, but there is method behind our madness!)
Time in the Markets
The concept of investing for the long term is not a sales tactic. Your portfolio consists of various asset managers who are applying deep thought and analyses to their underlying assets/companies. And these companies are, themselves, focussed on survival and recovery. In this regard, your best strategy is not to panic and not to control the process too much by making fear based decisions.
As with COVID-19, don’t touch your investments. We realise that, at times, total abstinence may be impossible, but essentially with the above in mind, only drawing what is absolutely needed and in small increments, is vital for your investments’ recovery.
Why we know our medicine will work
Fact: Markets will recover, although we don’t know when…
Here are some of our reasons:
- Markets are leading indicators and emotional weighing machines. In other words, markets are prone to extreme highs and lows, AND, for us, the concept of them being a leading indicator is vital. This means that bad news is priced in before the worst has arrived and, consequently, they will recover before the bad news is over.
- Governments are busy trying to save the economy with lower interest rates, stimulus and even lower taxes. These measures will go a long way to reduce consumer and business stress. Eventually consumers and businesses will feel less stressed and they will be encouraged by low rates to buy (again) into risk assets such as listed companies.
- Finally, those who stay the course or invest extra cash now, or nearer the bottom of the cycle will experience the sharpest gains. I.e. When the value of something falls 50%, it must climb 100% to reach its previous price.
Finally, as advisers, our big wish is that clients feel eager to engage with us and share their concerns. The more we engage (via phone, email and one day over coffee) the more we learn about each other and the better your investment journey will be.
Stay Safe and Stay Calm.
Stuart and Jonathan