COVID-19 - The Experts Advice
I must admit I am shocked at how things have turned since my slightly nonchalant attitude towards its impact last week. I genuinely believed this would pass much quicker than it has now been forecast to do. Although I stand by the sentiment of everything I said, I just underestimated its meteoric rise around the world.
On Thursday of this week, the markets experienced the worst day since Black Monday in 1987, a year before I was even born. Fear really stacked up yesterday in particular, with the UK government seemingly taking a slightly different approach to most of the rest of the world. It will be interesting to see if they're playing a blinder or having an absolute stinker. I am not qualified to comment.
However, once again, we can only do what we are being advised by the experts to do. If you have any symptoms, self-isolate and try to delay the spread of the virus further. Wash your hands and prioritise your hygiene more so than ever.
In the same vein, I would encourage everyone to listen to the financial experts and professionals, when it comes to stock markets and your families wealth. Feeling fearful during market extremes is expected and absolutely normal, we’re all human.
However, acting on the fear is when financial mistakes occur, sometimes to the degree where there is no recovery. My job, as a financial expert and professional, is to ensure that our clients don’t make any financial mistakes and I take this role very seriously.
The market is there to test successful investors, but this is a very different test. Using history as our guide it confirms that all the declines (even the deep ones) are temporary and trying to anticipate the timing of them is impossible. This of course is cold comfort when living in the moment and we can see that our nest eggs are considerably depleted, but it would again be remiss of us not to remind ourselves and our clients of this.
In summary, we remain cognisant of dangers of selling into market fear, when the historical lesson is clear that panic selling is a poor strategy, not least given the need to gauge the optimal time to buy back in.
I have heard murmurs of people claiming that this is unprecedented and wanting to sell all of their investments. Unprecedented as it may be in many aspects of life, in terms of the stock market, that is really far off the mark. "Unprecedented" territory as far as the stock market is concerned would be some sort of disaster that totally wipes it out. I mean TOTALLY wipes it out. Some kind of Armageddon. Should this current virus lead to that then none of this matters anyway.
I know it is scary, but stick the course and spend time with those that you love. If you cannot be with them, stay in contact as much as you can. And remember these wise words from the world’s greatest investor:
"The stock market is simply a tool that moves wealth from the impatient to the patient" - Warren Buffett.
Alfie Mullan, March 2020