Very suddenly, very clearly, we are living in unprecedented times.
In times like this, firms like ours do one of two things. We can say nothing and hope for the best. Or, we can communicate with our clients, give them the latest information and assure you that, whatever happens, we will still be here to answer your questions. Of course, for myself and the team at Jane Smith FP, the second course was always going to be our choice. Sometimes the news may not make for pleasant reading, but we take the review that you would rather have regular contact from us, rather than not hear from us at all.
There is a lot of change to digest in a very short period of time and I’m sure many of you will be understandably be asking, will my portfolio make it through this?
Following Boris Johnson’s announcement on Monday evening that we effectively go into “lockdown”, this week is again likely to be volatile, and probably for the next few weeks. Unfortunately, any action taken to slow coronavirus spread is likely to take time to work. The sad truth is that the number of reported deaths is almost certain to keep increasing in the short term.
There is however a way through:
• Social distancing will buy us time, giving the scientific and medical community time to develop vaccines, time to develop cheaper and quicker tests, and time to develop effective treatments.
• Central banks and governments are acting aggressively to mitigate the damage inflicted by the shut-down to protect the economy during this stage and to ensure it can rebound in the future, things like lower interest rates, restarting quantitive easing, encouraging lending and help to businesses to support employees.
Unfortunately, we should expect bad news in the form of an increase in cases and deaths in the coming days, and this could roil markets in the near term. But, we should expect them to start to decrease at some point, and this has the potential to be a powerful catalyst for markets.
We know that it can be frightening to see the value of your portfolio dropping so suddenly. The natural reaction could be to panic, to try and get out, to try and minimise losses. But, it’s important to remember that right now they’re not losses. While your portfolio remains invested, your loss is only on paper. The loss only becomes real when you physically sell out of the stocks.
Things won’t be easy. The recovery may not be quick. But history tell us the recovery WILL happen. The only thing that is certain right now is that selling out of investments will crystallise a loss. Waiting for markets to start to climb again before reinvesting will just mean it will take you longer to benefit from the growth and get back to where you were.
I hope that this provides you with some reassurance. But, of course if you have any queries at all, do just call or email. Nothing changes – we’re here to help.
In the meantime, stay safe and stay healthy.
Best wishes to you all – Nicola