Coronavirus – keep things in perspective

In the modern era, we have far greater access to world news at just the click of a button, or from flash news alerts on our phones.

This is not always a good thing as newspapers and websites publish news stories that will attract readers. It can be all too easy to focus on these stories and get gloomy, disheartened or uncomfortable about the reported danger to life, society or wealth of these threats, the latest being the coronavirus.

Over the past 20 years alone, there have been many material events that we may have felt uneasy about at the time.

However, these world and health events have happened throughout history. Over the past 20 years alone, there have been many material events that we may have felt uneasy about at the time. During such times – at least from a market perspective – it can help to look at the past to ease our concerns. The past may not, of course, repeat itself but markets have been remarkably resilient, as you can see from the chart below.

It is important to remember that in an efficient market current world events and investors’ views are already factored into share prices. As hard as it can be, we need to remember to keep our emotions in check, believe in the robustness of our portfolios and continue on our investment journey with a long-term view. Future news may make the outlook brighter or gloomier. No-one knows.

From a personal perspective these things are worrying, but we live day to day with many higher risks such as driving to work or catching the flu, which infects 1 billion people worldwide every year.

‘This too shall pass’ as the legendary investor John Bogle used to say.

It is worth noting that, yet again, the sensationalist headlines of the newspapers, TV and radio, are not your friend at times like this. It’s perfectly natural to feel anxious; if I was a consumer of the media I’d be anxious too.

The portfolio constructions we use take in to account that these events will happen, at times like these the defensive assets come to the fore. I’m happy to report that the defensive assets are doing their job exactly as intended right now. Year to date performance for the three most used portfolios to end of 9th March 2020 is as follows:

  • EWM P40 Cautious Plus -0.31%
  • EWM P60 Balanced -1.91%
  • EWM P80 Balanced Plus -2.04%

Source EWM/ Betafolio 01/01/2020 to 09/03/2020

When it comes to stock market investing it’s worth remembering that the advance is permanent; interruptions are temporary.

We’re here for you if you want to talk things through.

Dominic

About the Author

Dom is a qualified and experienced Chartered Financial Planner (CII) and Chartered Wealth Manager CFP (CISI) and a Registered Life Planner (Kinder Institute) with over 30 years experience. His work primarily focuses on retirement income planning, helping clients to maintain financial dignity and independence in retirement. Read more from Dominic...
This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

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I wanted to say a big thank you to Jonathan on behalf of the family, and especially from my Dad, who would have been so very pleased with the final outcome of the estate. This year should see the family able to draw a line under the estate and to continue life with the loving memories of our parents. A sincere thank you. We could not have done it without you. A.B. (Abingdon)

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