Coronavirus - Update 22 May 2020
Listed Under: Blog
As we enter the second phase of lockdown, it could be said a few green shoots of recovery are beginning to show through. Some see this as an opportunity, while others intend to proceed with caution, but however, you view the situation it will at some point come to a controllable end. Now is the time to make sure you are in the right place to handle things as we move forward.
Since our last newsletter, we have seen the market stabilise somewhat and with lockdown being eased it begs the question, is the worst of stock market volatility over? It would be a brave person who says yes. I think there are too many other factors that affect the markets. Things to consider are not limited to this country alone. How is the virus affecting our trading partners? What do the global supply chains look like? What about employment/ unemployment levels? Which businesses will thrive and which will not? What do currency levels look like? How and what are the central banks and governments doing? As previously mentioned, we get a lot of information which still looks at the market as an opportunity from a fund manager point of view. I do not think we have seen any meaningful results from the active fund managers yet given the short timescales we are looking at. It must be remembered that you are invested for the medium to long term and as such fund managers look at longer-term strategies and not quick returns. They are not stockbrokers.
There is also a lot of talk about what type of recovery we will experience. The favoured way to illustrate this is by the alphabet.
V shape recovery (sharp down sharp up)
W sharp down sharp up followed by the same (we have even had a mention of a wobbly W recovery!)
U sharp down wallow around at the bottom for a while and then sharp up
All of the above will depend on how long the virus affects us all and the duration of the estimated recessions around the world.
Is it a good time to invest? I personally think the answer is a cautious yes on the basis it is a medium to long term investment and there will be short term volatility. One of the many things that this time has made me reflect on is that we do have an attitude of “It won’t happen to me”. It has just happened to all of us.
If it is a time for reflection on this point then it is also a time to think about whether you have adequate protection insurance. I am not just talking about life cover but more in particular about critical insurance and income protection. We have all had a significant threat to our lives and livelihoods - ask yourself this; if there had not been government assistance, how would a business or family life look if income is disrupted by health issues? The government may not be so quick or so generous to support us in the future! We are not indestructible and if you run a business - guess what? You are not invincible.
If you would like any advice on any of the topics I’ve mentioned in this newsletter, please don’t hesitate to get in touch.
In other news....
We have successfully continued to work and offer client meetings by phone or video conferencing. We have completed business for both new and existing clients in this way and also continue to conduct regular client reviews though face to face meetings are not possible right now.
We will be launching an online full advice service in the near future which we are excited about. Watch this space for further details.
Stay safe, keep healthy and look after each other!