Posted on: 23rd April 2020
So, it has been a few weeks since our last communication with you and we thought that it might be time to check in again.
Firstly – and most importantly we hope of course that this finds you in a healthy state. It is certainly a situation where we must focus on health over wealth, but we do appreciate that your finances may also be a concern.
As such, it seems sensible for us to ensure we remain on track regarding your goals. Specifically, we’d like to ask that you keep me informed of any changes to your financial situation. We likely have the tools and knowledge to be able to help you develop a financial plan or give you advice during this difficult time – and that’s what we are here for!
Facts about the Coronavirus downturn
Through all of this, we at Haven have been keeping a close eye on the market downturn. Regarding the drivers of the market downturn itself, a lot has already been said. This is very much a global issue.
Commentators are expectant of a deep recession with high unemployment expected and poor economic data ahead. To offset this, a strong policy response (fiscal and monetary) is now in play. The Central Bank’s response is unprecedented, a word that we are becoming increasingly familiar with at this time.
As we said in our last commentary, the pattern of volatility – big up days and big down days (or vice versa) is upon us, and if you choose to follow the markets avidly then perhaps your emotions have followed this pattern too. But it is not the sign of a broken market—it is very typical of what happens when investors are unnerved (i.e. “in shock”). In fact, we heard the market reactions described as reaching “the point of maximum panic” over the last few weeks. We have every reason to believe it won’t last forever even though we may be in a position of “maximum pessimism” for a time.
Historically, markets have always bounced back. In fact, stocks are purported to have outperformed cash in every single 20-year period across history (using U.S. data since 1871) so holding stocks through crises has been rewarded in the past. Take a look at the attachment called Bull and Bear markets and see what we mean. It shows you the historic maximum gains that have occurred in the markets since 1900 relative to the troughs!
Our thoughts on positive actions to benefit you
This is a great opportunity to add value in the pursuit of your own financial goals. Here are our tips on how to navigate this downturn:
1. Stay focused on your goals. We have a financial plan in place to help you achieve what is important to you – and we have stress-tested that plan. Of course, if you would like me to review things and revise your projections and planning then let me know – because this might help you to stick to that plan and don’t forget that downturns are part of the journey to achieving those goals.
2. Don’t try to pick the exact bottom of the market, and we can’t do that either! Markets don’t work this way, because the market turns well before the economy turns. From all our analysis and knowledge, we believe the best approach is to phase buying while everyone else is selling. This as we mentioned in our last update is an approach that we mandate with your fund managers. Importantly, the key here is to understand that your losses are temporary and not permanent and some can be avoided with a solid financial plan. There is only one way to make them permanent and that is by selling.
Reach out for advice
For all your financial advice and services during the COVID-19 outbreak, get in touch , for financial stability and peace of mind.