POSTED 10TH MARCH 2020
As we are sure you will be aware, the coronavirus outbreak has impacted on investment markets over the last few weeks, and more significantly in recent days, with stock markets once again dominating the news.
Concerns about the economic impact of COVID-19 will understandably draw the focus of investors from the long-term horizon to the here and now and it is easy to react to alarming headlines and panic when events such as this occur. However, we believe that taking a more measured approach is key. Numerous epidemic outbreaks in the past have led to short-term losses in global equity markets. However, these losses have tended to be recovered relatively quickly.
Concerns around the continued spread of the coronavirus abound, particularly the potential isolation measures that may be required to prevent, or at least slow, the progress of the virus across the USA and Western Europe in the coming months. The reduced number of new cases being announced in China and the increased number of those who have recovered from the virus provides some encouragement. Despite being brought largely to a standstill little more than a month ago, companies say that their staff are now returning to work, factories are getting back towards full capacity, and consumers are resuming their usual spending habits in some areas.
Whilst there are many ways this virus can impact the assets in which you invest, it is important to separate permanent damage which will impact the long-term value of an asset from temporary damage which will quickly be forgotten.
It is important to highlight that our portfolios were well structured leading into this, with a highly diversified investment mix. We believe they will remain equally well-structured during the recovery phase because our approach is sensible and built in line with your risk tolerance.
Our investment partners, with whom you are invested, are actively assessing what remains a very fluid situation with a view to taking advantage of investment opportunities, where available, and making prudent changes as required in this challenging market environment. If the impact is short-term, price declines may produce buying opportunities.
Warren Buffett, chairman and CEO of Berkshire Hathaway, said recently that “you don’t buy or sell a business based on today’s headlines. If the market gives you a chance to buy something you like and you can buy it even cheaper, then it’s your good luck.”
We continue to focus on providing quality financial advice, and unless your circumstances have changed, our view is that now is not the time to react to current market conditions.
As always, we are happy to explain further. Please contact us if you have any questions.