At Robertson Baxter we pride ourselves on how we service our clients, and hopefully you will agree that we do a good job at this. We’re still deep in the Coronavirus pandemic, this is a once in a lifetime public health emergency. We understand that right now you might be feeling anxious, absorbed in thought, maybe even emotional as you see the headlines about Coronavirus and the effects that it is having, particularly on global investment markets where you have a vested interest.
We want you to feel reassured that we have encountered and lived through historic events such as we are seeing now. Robertson Baxter was established in 2007 right on the eve of the 2008 Financial Crisis which had large scale effects on global financial markets, similar to those we are experiencing now. We want to deal with this head on, be proactive in our communication with you (our clients). This approach helped the firm and you overcome this difficult period before and go on to prosper and have relationships stronger than ever, and we are confident we can do this again almost 13 years on.
Stock markets have acted as we’d expect, negatively. The stock market feeds off two powerful human emotions, that of greed and fear. Unfortunately, the media are good at feeding the latter emotion. We don’t know when the market will ‘turn’, anyone who tells you they do, run for the door, it’s not an untruth, it’s a lie. But one thing we do know, it will turn, and history proves this time and time again.
As your trusted advisers, we’re here to offer calm, perspective and provide any help and guidance on dealing with the current volatility both mentally and emotionally.
Investing is a long-term journey and like any journey you have a starting point and also a destination, more commonly known in this industry as an objective. Every journey has potential to have its ups and downs. Right now you will be feeling a mix of emotions, you have to fight all of your human instincts (tune out the news) and build a view that is separate from the herd. This can be very hard, but if you can learn to ignore the noise and stick with your financial plan, you’ll do just fine.
We are here on that journey with you to help. You are not alone. You already have a perfectly diversified portfolio, ideally suited to your long-term goals being looked after by a team of expert fund managers. Your portfolio is also built to cope with the deep temporary declines we’re experiencing now. The best thing you have going for you right now is time. We can’t stress enough the long-term nature of investing. An investment journey should last 10, 20 or even 30 years. That mentality of years rather than weeks or months, is the context through which to view the current turbulence.
What Should You NOT Be Doing In the Short Term?
This might sound easy for us to preach, but many of us are not just advisers, we are clients also. We have our own investments, our own objectives and financial plans, so personally we have felt every drop of the decline, we have ‘skin in the game’. Based on our knowledge, experience in the industry and exposure to similar market turbulence in the past, we know that the correct thing to do is ‘do nothing’ and this will see us all through this.
To succeed at investing it’s all about the time you spend in the market, not out of it. While the Coronavirus will likely continue to rattle markets, long-term investors shouldn’t be overly concerned. We have enough to deal with through the change and disruption of our lifestyles, let’s not compound the issue by making grave financial mistakes with our investments. Volatility in the stock markets is normal and markets often rebound quickly.
Again history tells us this is true. The table following illustrates how past epidemics have impacted on the markets, but also how quickly the markets have recovered:
It’s inevitable that you will want to take some active interest in the news, we all do, and over the coming days/weeks you will most likely hear the ‘R’ word, recession. Whilst we never like to make predictions, we’re almost certain we’ll be heading into a global recession. Recessions are part of the natural business cycle. Don’t let the media scare you now with the big ‘R’ word. The economy expands and contracts, it’s what it has always done.
Let’s end on a positive note. Going into this crisis we could not have been in a better position economically, a decade plus of prosperity, unemployment at historical lows, businesses with more cash than they’ve ever had and the personal balance sheets of individuals at a high. There’s never a ‘good time’ for a pandemic, but if we could have chosen a point in time, this would likely have been it. Globally all the utilities and resources are in place to address this head-on.
When the stock market rises you don’t ‘win’ money, just like when it declines you don’t ‘lose’ money. You only lose money when you commit the worst financial action an investor can make, selling a portfolio in a declining market. This is the action reserved for the DIY investor and the financially failed investor.
As Warren Buffett says:
“The stock market is a device for transferring money from the impatient to the patient.”
Successful investors are patient, failed investors are impatient.
We have a professional obligation to help as many people as we can to make wise financial decisions. If you wish to speak to your financial adviser at this unprecedented time, please do not hesitate to give the RB Team a call, as always we are happy to help.
The Robertson Baxter Team