We’re experiencing extreme market volatility right now, due to the as-yet-unquantified impact of the coronavirus. While this can cause understandable anxiety, that emotion needs to be kept in check when considering investments. We are sending the following text out to all invested clients by email today:
Apologies for the round-robin email, but we think it is important to comment on the unusual market situation we are currently experiencing.
At the close of play yesterday (12th March 2020) the UK stock market experienced its worst single-day drop since 1987. It isn’t the depth of the market decline which is particularly unusual but its speed, with markets off more than 25% in the space of a few short weeks.
The reasons are clear. The primary driver is concern over the impact of COVID-19 on the economy – markets do not like uncertainty. Add to this the oil price war begun this week and the restrictions on travel and commerce, and you have something of a perfect storm.
The question, of course, is what should we do? In times like this, it is essential to remember the basic truths of investing.
- Investing should always be for the long term
- Market declines are temporary, but markets ALWAYS advance over the long term
- Spreading your money around over different classes is an excellent way to reduce the volatility of your investments
- Even though the value of your portfolio may be down temporarily, you only lose money when you sell out of your investments and move into cash
Even though it is normal to be worried, afraid even, making investment decisions based on fear is always unwise. As difficult and counterintuitive as it might seem, the best course of action is usually inaction.
We believe that your investments are well-placed to weather any storm. Yes, they will fall and rise with markets, but the spread of investments will mitigate this to a significant extent.
As your advisers, we will hold our nerve in this difficult time and we ask you to do the same – we are convinced this is the right thing to do for your long-term financial success.
Of course, we remain available to answer your questions and concerns at any time – please don’t hesitate to call.
Finally, we are taking careful note of the government’s advice on isolation procedures. For now, we will consider the best way to conduct meetings on a case-by-case basis. If this changes we will update the Jacksons Website at jacksonswealth.com
We are very grateful for your trust; please be assured of our vigilance and care
Your Jacksons Wealth Team