As we start a new week (06/03/2020), nothing has changed in the news headlines – Coronavirus continues its spread around the world raising volatility on global investment markets.
At Robertson Baxter it is also true to say nothing has changed. The message to clients is consistent; remember your long-term goals, tune out the short-term market noise, remain patient and you will be rewarded. For any new investors the current market conditions potentially represent an attractive time to invest.
Markets do not like uncertainty, and given the continuing uncertainty around the effectiveness and timelines of containment efforts, it’s unlikely market anxiety and volatility will subside quickly. However, there is as mentioned above no need for long-term investors to panic. Major global events such as this represent a speed bump in your 10, 20, or 30-year investment journey. History suggests that markets will recover as we advance through 2020.
What to Expect in the Short Term?
The coronavirus outbreak has disrupted global supply chains and hurt the earnings of large corporates who trade and supply throughout the world.
Companies that rely on China for production, or as an end market, will all be affected until the disease outbreak is brought under control. Travel bans will likely hinder the operations and revenues of global air carriers and travel firms, especially as we head into the holiday season with Easter and Summer just around the corner, and perhaps most impactfully closer to home, efforts to reduce the spread of the virus may curb consumer spending for a period of time affecting the UK economy.
In the near term, we are naturally going to see higher stock price volatility and worsened stock market performance. Governments and Central Banks will be expected to respond in this situation to alleviate fears.
Putting it All in Context
With the barrage of negative headlines, it is understandable to feel anxious and even possibly look to make some bad short-term decisions. At the end of the day, remember that the economic impact whilst meaningful will be temporary and markets will recover and move higher again in time.
Whilst market declines are unpleasant, they’re also very common. Focusing on longer term goals rather than day-to-day fluctuations isn’t easy, but it has consistently proven successful.
If you’re feeling particularly worried, take this time to speak with your financial adviser, don’t hesitate to contact us. We understand your long-term goals and can help put the market conditions into perspective. We want to work closely with you through good and bad times to help you understand how this market reaction may impact on your situation, and also advise you on any actions you can take to stay well-positioned toward your goals.