Due to the global uncertainty owing to the Covid-19 pandemic, equity prices have quickly entered ‘bear market’ territory. This has led to an unprecedented fiscal and monetary policy response from governments worldwide. The following is our current assessment of the situation.
Fastest Ever 30% Stock Market Drop
As of March 23th, the MSCI World Stock index had fallen 30% in just one month. The volatility across all asset classes has surpassed anything I witnessed first-hand in the depths of the 2007-09 Global Financial Crisis.
Time to Buy.. or Sell ?
As I have written many times before, attempting to consistently and successfully time market tops/bottoms is futile – There is simply too much complexity, uncertainty and emotion involved. You may be concerned that your investments have temporarily declined in value, but this only becomes a permanent impairment of capital if you sell. Over time investors who remain disciplined, making regular contributions to investment or pension plans, riding out temporary declines and taking a long-term view have been rewarded.
Is This Time different?
The simple answer is that nobody knows for sure. There are no facts about the future. Economies will take time to heal when the coronavirus is eventually beaten and like all bear markets, this one will bottom sooner or later. We cannot tell what will happen in the near term, but history has shown that investment markets resumed their long-term uptrend after each past crisis was resolved.
What to do?
Tuning out financial media and making sure you respect your risk tolerance and stick to your financial plan is a good start. If you don’t already have one, building a long-term financial plan for you and your family is worth considering.
Some questions we are currently helping our clients with are as follows:
- Am I still on track to meet my financial goals?
- How much cash do I need in my rainy day fund?
- Should I start to invest some of the cash I have in deposit accounts?
- Is my investment plan still appropriate for the long-term?
- How does the recent market correction impact my lifetime cashflow projection?
- Do I have the right amount of life/critical illness/income insurance?
- Should I rebalance my investment portfolio if the amount in stocks is below original target?
New Working Practices
We are open for business and have implemented a new policy. All meetings will be conducted remotely for the foreseeable future and our offices are closed for client access. We use Skype to video chat with our clients and update financial plans and other materials on screen, which are then followed up with emailed reports. Telephone calls to the office will automatically re-route to mobile.
All of our documentation for both new and existing clients is now electronic. We use email with secure electronic signatures for Financial Plans, Risk Profiling Reports, Pension & Investment Plans & Life Insurance.
If I can be of help in these difficult times, please feel free to get in touch.
Ardbrack Financial Ltd.
021-4773833 / 083-4115277
Disclaimer: The content of this article is for general information purposes only. It does not constitute tax or investment advice as it does not take into account the investment objectives, knowledge and experience or financial situation of any particular person or persons. You are advised to obtain professional tax and investment advice suitable to your own individual circumstances. Ardbrack Financial Limited makes no representations as to the accuracy; validity or completeness of the information contained herein and will not be held liable for any errors or omissions.