Last Monday we had to postpone our plans to fly to Germany, as announcements on the BBC confirmed the closure of public places in Berlin which was our intended destination.
That said we managed a few days in Port Isaac and returned last Thursday.
Since then we have been processing all applications and payments some of which have been tax year sensitive at the same speed that we usually do.
We have noticed that some call answering times with some of the Pension and Investment companies we work with has slowed, which is understandable given that many service centre staff are working from home.
So far this week I have completed one essential client meeting and will maintain service within sensible guidelines and protocols whilst minimising risks to health.
So, the message is we are accessible. Call or email if you need to.
The last two weeks or so have been worrying for many. ‘10% drop’ notices have been sent out and even the most defensive portfolios have suffered falling values. My own portfolios (and Caroline’s) are heavily equity-weighted so they have taken a big hit which hurts. But I believe in what we do, so I keep investing and I stick to the plan even when it hurts.
So, the question is: how long will this last and what can we do about it?
The simple answer is that nobody really knows. Fortunately, I get sent a lot of data and commentary by numerous sources, some from the investment side and some from the advisory side.
Below is a communication I read yesterday from Maven Adviser, so I must credit him. It is insightful and offers a different viewpoint as well as a Warren Buffett quote at the end.
Lastly, there is a useful infographic from Vanguard that shows historic durations of bull and bear markets since 1900.
From Maven Adviser
We’re still deep in the pandemic, this is a once in a lifetime public health emergency. In the investing world this is called a ‘Black Swan’, something you thought was impossible until you see one.
Stock markets (humans) have acted as we’d expect; negatively. The stock market is a story, the story changes, the prices change. Now the story is very negative, when the story changes the prices will change again. The stock market overreacts in both directions. This is because the markets feed off two powerful human emotions, that of greed and fear. We don’t know with foresight when the market will ‘turn’, anyone who tells you they do, run for the door, it’s not an untruth, it’s a lie.
You already have a perfectly diversified portfolio, ideally suited to your long-term goals. Built to cope with the deep temporary declines we’re experiencing now.
I’ve always told you a storm was coming…well, now it’s here. We never leave our car during the blizzard. We wait until it passes. Be patient.
Like I said last week I’m invested in my most volatile (‘risky’) portfolio, so my life savings have felt every drop of the decline. I have ‘skin in the game’; it’s painful to see my portfolio decline, but as a student of history and more importantly, human nature, knowing that the correct thing to do is ‘do nothing’ will see us all through this. 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.
The nature of risk is that you don’t see it coming. Now for some good news. 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 I could have chosen a point in time, this would likely have been it. We also have a globally connected world and have all the utilities and resources 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.”
A history of bull and bear markets
Successful investors are patient, failed investors are impatient.
If you’re investing every month (which many of you are) this is a deep temporary market sale, which is good news for your automatic monthly investment premium.
There will be some good consequences from the crisis, such as:
Conscious spending – do I really need these things/items in my life?
Focusing on what’s important, people to spend your time with, places to go and things to achieve
A focused desire to becoming financially free sooner (investing more from a younger age).
Stay healthy, stay safe and keep the faith.