Black swan ready to glide

Black swan financial events

Extremely rare, a severe economic impact and impossible to predict? Few would argue that Covid has been all that, but some feel that this “black swan” event could have been avoided.

A black swan event is one that is extremely rare but has severe consequences. They are unique in that they cannot be predicted beforehand, but there are often unsubstantiated claims that they could have been prevented.

With so much personal and financial turmoil caused by the coronavirus pandemic, what’s happened across the world during 2020 should never be downplayed.

The health impact has been considerable, with millions affected worldwide. Financially, global finances took a battering as governments looked at ways to respond.  

However, harsher critics are asking whether the situation could have been avoided?

Such suggestions often follow black swan events.   

Can you prepare for a black swan event?  

Like the financial crash of 2008, in the days after Covid became a global issue the markets tumbled. The worst hit stocks saw falls of up to 25% across a period of complete uncertainty.

The FTSE 100 recorded losses of nearly 9% on just one day!    

So, could any of this be prevented?

It is always difficult to predict when an event will occur, but like the Spanish Flu (1918), Black Monday (1987), the SARS outbreak (2003) and of course the worldwide banking crisis (2008), history tells us that they will happen at some point.

For investors and fund managers, having diverse portfolios always helps. With coronavirus, for example, although many stocks suffered losses in the early part of the pandemic, there were also many winners – such as gaming companies, TV and film streaming services, fitness apps and supermarkets.

Those who believe that the Covid outbreak is not really a black swan event make this claim because they think that many observers DID highlight the possibility of an imminent global outbreak.

Famously, the likes of Barack Obama and George W. Bush both talked about the growing threat of pandemics, as did Microsoft Founder Bill Gates – as reported by USA Today.

In 2016, the UK government’s “Cygnus” exercise concluded that the country was not properly prepared to deal with a severe pandemic. So senior figures knew the country was vulnerable.

When the coronavirus is brought under control, there will undoubtedly be questions to be answered.

Markets have returned strongly  

Whether the 2020 coronavirus pandemic is described by some as a black swan will be a talking point for many years to come. What is important is that the world makes thorough preparations for the next big event that will surely come at some point.

Meantime, the global stock markets have returned strongly. As vaccine news has filtered through investors have gained confidence and planned for 2021 and beyond.

There will always be cash to be invested. People, businesses and countries will always need to generate income from interest and dividends on investments.

The key points to emerge from the Covid experience, and other significant market events, is that stocks do recover over time. Black swan or not, economies are already looking to glide into a more positive future.

Investing to generate funds for your retirement should always be done over the long term.   

We plan to deal with global challenges

We can’t predict when the next worldwide financial challenges will occur, but we can and do help our clients to make the best possible preparations to deal with various situations.

It’s about careful, structured cashflow planning. With a firm understanding of your current financial position, your attitude to risk and your hopes and dreams for the future, it’s easier to map out the best investment options for you and your family. 

As new black swan events occur, we aim to help your investments ride out the choppy waters with balanced portfolios.

Logic Wealth Planning offers independent financial advice whatever stage of life you are at. If you’d like to see if we’re the right fit for you, let’s have a no-obligation informal chat. 

In the first instance, please call us on 0808 1234 321 or email info@logic-wp.com to arrange a convenient time to chat.

Please be aware the value of investments or income from them can fall as well as rise. We are here to help you make informed decisions as you put important things in place for you and your family.

* Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.