27 October, 2020

Coronavirus: Not the greatest threat to your personal wealth

Over the last 27 years as an Advisor I have felt compelled about half a dozen times to reach out to clients during turbulent moments to reassure and to bring some balance to prevailing fear-laced media reports. I understand that you may have some concerns about your investments and how recent events can impact your future. My commitment is to be by your side on your investment journey, through good times and bad. I am here and not going anywhere.


Challenges from the impact of the Coronavirus and the recent fall in oil prices have brought an end to the easy-money party for many investors of 2019. Recent global events, coupled with 24/7 reporting, have elevated fear leading to volatility in global stock markets. Of course these events have an impact on economic growth but let us not get caught up in the folly of the crowd. For the short term it is imperative we all stay calm and adhere to our structured and proven approach.


Here are the 5 things I hope clients will remember and focus on as we move through recent negative market activity and upcoming reports you might hear:


1) Fear is the real pandemic affecting us today.

News Travels fast but colourful and creative opinions travel faster. We have never been more connected to each other. This allows us to share facts or opinions with each other with incredible velocity. These constant stimulations trigger an endless stir of emotions. The strongest emotion for most of us when it comes to our money is the fear of loss. The media today in its competitive bid for relevance has a bias towards pushing on this hot button of fear using colorful and descriptive words that can easily be mistaken as fact. Delivering a balanced message is near impossible. Just as we need to protect ourselves physically from being exposed to Covid-19 we also need to protect ourselves from catching this fear bug.


2) Let logic triumph over emotions.

With this recent pandemic of fear taking place, we need to take a minute and relook at what history has taught us and why we are invested the way we are. Investment history has shown quite clearly, that investment success is not about being able to pick best stocks or best time to invest, but rather simply being in the market and letting the power of the market prevail over time. History has also clearly shown the price of admission to earn these higher returns is the inevitable ups and downs associated with the market. We should not be surprised that a great investment return has as its partner short term fluctuations in value. It is easy to fear a market decline but we should fear a market that charges forward with uncontrolled euphoria without a temporary consolidation. Emotions cloud our ability to focus on these investment truisms.


3) You are in a well-built portfolio.

Our portfolios are built to withstand and push through such storms as we are experiencing today. Key points here: a) your individual portfolio is a balance based on your personal goals and stated risk tolerance, b) your portfolio is extremely well diversified by asset class, industry sector, geography, currency, interest rate risk, and portfolio management style.


4) Everything passes with time:

History has proven that with time all things come to pass. We don’t yet know if the market recovery graph will end up looking look like a “V”, “U”, or a “W”. The important point is that a recovery has always followed a market downturn…not a complete collapse.


5) What to do:

If you are in the net-accumulation phase of your financial life, consider the coming months as a buying opportunity and a time to deploy money into a market. If you are a retiree, stay the course. The recent market downturn is unfortunate but does not change the long-term prospects for your portfolio.


If you have any questions or concerns about how the recent market events have impacted on your family’s portfolio and financial future, please do not hesitate to contact my office.