Major global events have always driven the performance of financial markets, and increasingly so as the world becomes ever more connected. Here are some reasons why investors should not panic.
The speed at which the Covid-19 virus spread caught everyone by surprise. Governments, major organisations, and the investment markets had little time to prepare or react.
The virus has and will affect almost every aspect of our lives for months and possibly years to come. Stocks have fallen sharply, but also recovered in fits and starts.
The same is true across financial history. Markets have recovered from significant downturns in the past, most recently after the severe global recession of 2008 that followed the banking crisis.
The message from industry experts, analysts and independent advisers is that investors should not panic. Reacting to short-term losses can only add to the market panic.
What have we learned so far?
Research by Morningstar in late March highlighted the following impact: global stocks fell sharply, with high-yield bonds also suffering but not to the same extent as stocks. Oil took the most severe punishment, and the vast surplus supply now stored by the major producers has seen barrel prices plummet.
Government bonds, gold and cash have all avoided much of the mayhem.
Look at the informative charts and graphs HERE that highlight how markets suffered but ultimately made full recoveries.
The oil crisis of 1973 must have seemed catastrophic at the time, with maximum market losses reaching nearly 44% at one point. The global financial crisis after 2007 was worse, with market losses totalling almost 57% at its worse.
While there are many examples of markets falling following significant global events (remember Black Monday in 1987?), it is important to appreciate how those investments have always recovered.
Whatever occurs, there is always an appetite to invest.
As we now know, investments DID recover over subsequent years, and markets peaked in early 2020. The rest, as they say, is history.
We continue to support our clients
The first half of 2020 has been a challenging time for everyone. It is increasingly important to get good independent advice, and this should be done as frequently as possible.
Discussing the best options for you and your investments with a qualified IFA will ensure that what you hope to achieve over the coming years will be matched to your investments.
You should never try to forecast how the market will perform in the short term, and it is always best to keep a diverse portfolio so that you enjoy smoother, less volatile investment growth over the long term.
While social distancing remains in place, Logic Wealth Planning will make every effort to communicate with clients in any way that is convenient and safe.
In the first instance, please call us on 0808 1234 321 or email firstname.lastname@example.org to start the discussion.
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.