Update from our Operations Director
- 7th April 2020
Over the last week the financial markets remained unpredictable as the measures to contain the spread of COVID-19 continue. The FTSE 100 had its first positive week in seven weeks, while European shares had a three-day rally, as investors responded favorably to actions from central banks and spending and relief packages at the government level. However, the outlook for the economy and investment markets is still uncertain in the short-term, with analysts extending their predicted timeline for the lockdown to be in place.
In March, stock markets suffered their two biggest one-day drops since the ‘Black Monday’ crash in 1987. Two weeks later, the US Dow Jones index saw its biggest one-day gain since the Great Depression in 1933.
This underlines what long-term investors already know; namely, that markets invariably recover from the kind of short-term disruptions caused by the COVID-19 outbreak and reward those who can ride out the bumps along the way.
With this in mind, it’s worth remembering the top principles of investing:
- Take independent advice;
- Agree your objectives, make an investment plan and stick to it;
- Don’t just invest in cash;
- Diversify your investments;
- Invest for the long term;
- Stay invested.
- Remember: Investing with a long-term outlook and with long-term goals is the best way to reduce the impact of stock market fluctuations and to see out periods of volatility.
Our philosophy is that no one can predict the peaks and troughs of financial markets with any accuracy and it has always been extraordinarily difficult to time when the best (peaks) and worst (troughs) are. Timing the stock market is extremely difficult, so often the best policy is to stay fully invested over the medium to long term. Volatility is a part of long-term investing which is why we always take time to understand how much risk any client is prepared to take before investing. We also generally believe in the benefit of diversification of assets to help manage some of the extremes of the markets. Working with our investment partners we take a multi-asset approach means that some assets can fair better in different market conditions. An appropriate multi-asset fund, fitting the client’s attitude to risk and investment goals, can offer diversification benefits which aren’t solely reliant on the performance of equities. Many government bonds, for example, have seen historically low yields in recent weeks as investors flock to assets perceived to be lower risk than equities. (Prices move inversely to yields.)
With economic impacts and job security adding to the many concerns people have, this really is a time to remain united and supportive of each other. For the second week in a row, our nation showed its appreciation for our frontline workers with #clapforcarers. Despite all the negative press, it’s fantastic to see such a gesture and to read about all those that are doing their bit in a time of crisis.
We salute them all.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.