To say we are currently living in uncertain times would be a massive understatement. At the start of what for most people is week 4 of staying at home, we find ourselves adjusting to a new normal. Creating a new routine, some good habits and structure, are helping people to keep their sanity.
Whilst we’ve all made huge changes to our daily existence, our key workers show incredible commitment to their roles. Either providing care by building or manning hospitals or keeping the supply of food and medicines available to us all. Given the risk to themselves and their loved ones, I find the devotion shown by so many, very moving. Let’s show our appreciation for their dedication at every opportunity.
Reports tell us that half the world’s population is now in lockdown. Whilst each individual is facing their own challenges, with their own story of the impact of Covid 19 on their lives, some comfort and connection can be found from facing this together.
Fear and worry are perfectly normal reactions at times such as these. We are scared of being ill, losing loved ones and an overall sense of being out of control. It’s an entirely natural human instinct, derived from a brain that was originally designed to protect us, in the moment, for the sake of survival. Literally fight or flight. But we must remember to see things as they actually are, not worse than they are.
Fortunately, as human beings we are also given the ability to control our behaviour. More than ever, now is an important time for us all to distinguish between the things we can control and those we can’t. Simply accepting the latter will allow many to breathe a sigh of relief, as was the case for one client I spoke with last week. Focusing our time and energy on the things we can control will pay us back in spades when we are the other side of this situation.
At the end of this update, I include a link to a video that gives us a glimpse towards our future. I would strongly encourage you to watch it. For me it symbolises hope.
One thing we know we can’t control is the markets. Financial commentators will give you a prediction of where they see the market 3 or 6 months from now, but it’s important to recognise that they don’t know. No doubt, they will deliver their message with such conviction and overconfidence that it seems believable. But this misinformation impacts our feelings and, in turn, our behaviours.
We must remember that markets are always unpredictable in the short term, even without a crisis. Focusing on the long term is critical and an important distinction between a successful investor and someone taking a short-term view, akin to that of a gambler.
At times like this, it can be easy to be drawn into the beliefs that:
THIS time is different
THIS time is worse than ever before
THIS time we won’t recover
These too were the questions on everyone’s mind in 2008. The prospect of overcoming the potential collapse of the financial system was beyond comprehension. Given I also don’t possess a crystal ball, we refer to history as our guide. It has shown us that despite many human, financial and natural disasters, the market has made progress. The unknown is when we will turn that corner and start back on the upward curve. Humanity is a powerful force that I wouldn’t bet against. You can read more about how human innovation drives the markets here.
A global recession would now seem inevitable, and further downturns in stock markets are to be anticipated. However, holding a globally diversified portfolio of investments, means you were already invested to weather all market conditions. Being diversified to this extent means we don’t need to attempt the impossible, namely predicting which individual companies will recover and which will fail. More to follow on this in our upcoming newsletter.
There are opportunities here for the patient and disciplined investor:
- To stay invested – hindsight will show us that selling assets that are declining in value would have been the wrong thing to do
- To invest more – if your cash flow permits and your discretionary spending has fallen because you can no longer go out for dinner or on holiday for example.
A fundamental part of our relationship is understanding how you are likely to feel and respond during these inevitable market downturns, to the extent this is possible. We create strategies that make holding your position feel more comfortable than it otherwise might; such as holding cash for emergencies and to cover income you depend on for a period. Whilst holding cash can feel counterintuitive during periods of market progression, the peace of mind it brings, comes in to its own at a time like this.
Some ideas that may help you manage how you feel during a period of uncertainty:
- Try not to watch or read the NEWS (Negative Event World Service as it’s also known) too often. It sensationalises the facts. I prefer the Downing Street Daily Updates to keep abreast of what’s going on, delivered with much less of the drama.
- Take a moment to recognise all the human innovation we are witnessing right now. In the end this will drive the human race and global economy forward.
- Identify and feel grateful for all the acts of human kindness that we are witnessing. I find writing down the things I’m grateful for helps. In moments of gratitude, we let go of other powerful emotions like fear and anxiety.
There are many tragic stories emerging from this age of Coronavirus, but there are also many of love, hope and collaboration. If we look for them there are silver linings everywhere. Whether it’s the communities that have pulled together to support the vulnerable and those self-isolating. Or the families that have the opportunity to spend more quality time together, than ever before.
The link to the video I refer to above is here: #WEREMEMBER
There is nothing more important right now than the physical and mental wellbeing of ourselves and our loved ones. These are the things to focus our energy and resources on. We’re here to help, so please reach out to us if there’s any way we can support you. We’ll also be staying in close contact during this period of uncertainty.