The current market volatility is a fluid situation which we are monitoring and this statement will be updated to reflect changes as they happen.
We are experiencing significant market volatility, largely as a result of Coronavirus, falling oil prices have further destabilised the markets.
We understand that this is worrying for our clients and that taking action might not be in their best interests. It is important to remember that investments are for the long term. During your time invested, there will be many ups and downs in markets. These are to be expected when invested, the degree to which values rise and fall will be impacted by external forces over which none of us have any control.
This is a time of great uncertainty and there may be further falls as action is taken and Governments react to the situation.
What we do have control over is the portfolios we build and the actions we take when markets are falling. Your portfolio is made up of a diverse range of assets, therefore, you are not exposed only to equities or a single asset class. Portfolios are made up of other assets such as bonds, property, cash and other alternative investment strategies. This approach is designed to help minimise shocks so that if a single asset type falls sharply in value, the others will not fall as far and offer some protection to the value of your investment. This approach does not protect you from the risk associated with investment and there will still be fluctuations in the value of your investment.
Each individual holding in your portfolio has an investment manager and a team of experts trying to achieve the best possible outcome for that part.
Irrational decisions should not be made in times of volatility. For example, deciding to sell all investments to cash will result in the realisation of losses. If the monies are not required, then the approach we suggest is to do nothing. Remain invested and continue in line with the original plan to achieve your long term objectives. Monies are invested knowing that there will be fluctuations, however, over the long term a positive return should still be achieved.
If you sell all assets to cash with the intention of reinvesting ‘when things settle down’, this presents a great difficulty. When do you enter back into the market? It is very difficult to know when we have reached the bottom in order to buy back in. Often, you will miss the bottom and end up buying back in at a point higher than you sold. Doing this would compound the losses realised when you sold out in the first place. No one can time the market to get this course of action right. If you remain invested, then you can be certain that you will benefit from the full effect of the rising market.
I realise that knowing investments are well diversified and for the long term may not diminish the level of worry you are experiencing in relation to your own portfolio. We do not know what will happen or how or when the market will recover. What we do know is that historically when these events have taken place, the market recovers and continues to grow. I reiterate that remaining invested is suitable.
If monies are required from your portfolio and there is no way to avoid this, we will discuss the most suitable method of extracting what is required.