The case for Investor Calm with the Coronavirus

The Coronavirus (Covid-19) outbreak is, undoubtedly, a significant human crisis and it will have an ongoing impact on markets. However, like epidemics and pandemics been and gone, this too will pass.

My support team of investment specialists and I, have been carefully watching investment market gyrate around the world. Having experienced negative market sentiment since 1987, this is just another period of volatility that I see unfolding.

Whilst we watch the recent sell-off in financial markets, we understand that global supply chains have been disrupted; and we believe that it will result in a temporary shock to global economic activity. These types of market conditions, where uncertainty and fear are leading to many investors selling indiscriminately – while not that frequent – will occur from time to time.

As investors, it is important to understand that whilst the risks of recession have increased marginally in some parts of the world, this correction is occurring at a time when many global share markets were setting record new highs on investor optimism and importantly, against the backdrop of record low interest rates. 

When panic is driving markets, it’s wise for investors to take a step back, and view events and information in context and with calm.

My message to investors is:

• For those investors with cash to invest, this could very-well be an opportunity to add to your investments.
• For those inexperienced investors, this is but a blip on your wealth creation path.
• For those investors using the ‘dollar cost averaging’ strategy – this is the very reason you are investing regularly!
• For retirees, we have already built in strategies to help you through this blip in your investment journey.

Though nerves are being tested, taking a long-term view and sticking to a long-term strategy is critical.

The words of Benjamin Graham should ring true here: “To be an investor, you must believe in a better tomorrow.”

I am very happy to receive calls from Blue Chip clients and potential clients, who may wish to discuss their personal investment position, even if outside of our portfolio review cycle.

Graham

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