Update on COVID 19 and your investments
COVID-19 and Your Investments:
Right now, times are challenging—the COVID-19 outbreak was swift and most people have felt the impact. It’s natural to be concerned about how the virus could affect you, your loved ones, community, finances and more. We want to help relieve some of that stress by providing you sound, straightforward analysis of COVID-19’s market and economic impact.
Lean on our extensive experience and let us be your guide through these volatile times. We’ve helped hundreds of clients navigate bull and bear markets during our 20 years in business. We can help you understand what is happening in markets now, what history suggests may happen going forward, and what that means for your investments.
When markets started falling in late February, we believe they were anticipating the economic disruption COVID-19 containment efforts would bring. Because stocks move in advance of the economy, the fast, far-reaching interruption to businesses forced markets to price in a far higher probability of economic contraction than anyone thought likely before.
The ultimate size of this economic contraction depends on the duration of COVID-19 and containment efforts. If the virus fades with flu season in the northern hemisphere (as some medical research suggests is possible), we could see a pickup in economic activity sooner than most expect as institutions lift their shutdowns. If it lasts longer, a deeper contraction or recession is likely.
However, we do believe the economy will eventually recover, and for investors, it’s critical to know stocks usually rebound before recessions end, according to our research. So whilst the economy is important to watch, be careful basing investing decisions on economic data alone.
We don’t know, and we don’t believe anyone else can tell you either. In our opinion, this bear market’s duration depends on how long COVID-19 lingers and how long governments, people and businesses limit economic activity. We can tell you that though the beginning of this bear market was unique, investors’ reactions to it are not.
This suggests the eventual recovery will follow a typical pattern. Bear markets typically end after investors’ expectations become so bleak they depress stock prices to irrationally low levels. From there, any small positive can send stocks surging into the “V”-shaped recovery of a new bull market.
We’ve long believed the riskiest thing investors can do is miss the market up days they need to achieve their long-term goals and objectives. That’s true today, too. Though we can’t be sure how long the volatility will last, at best, changing your investing strategy now will likely lock in losses and, at worst, derail you from the investing goals you’ve been saving for.
Each investor is different and your particular circumstances must be taken into account, but overall we recommend staying the course and focusing on your long-term investment goals. Remember, stocks’ historically high long-term returns include all bear markets. Being patient and staying in the market now will help ensure you are able to benefit when the next bull market begins.
During these volatile times, it is more important than ever that we maintain our excellent level of service. We also help investors cut through the media noise by providing straightforward, fact-based information and advice when requested.
How can we help ?
The coronavirus’ toll on human lives and communities has been tragic, and the resulting financial strain on people and markets hasn’t made it any easier. Many investors feel like they’ve been thrown off course in their efforts to reach their financial goals.
Chesterton Grant have been through bear markets and pandemics before, and we’re here to help now. Contact us online or by calling 01244 526888 We’d be happy to share our perspective to help get you back on course during these volatile times