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News and Insights

Some things to remember when weathering a downturn in the market

Stuart Hutton - February 3, 2020

Last week we saw one of the biggest falls in the global stock markets since the credit crisis in 2008, so it is understanding when investors are wary and maybe even fearful of such events.

There is no doubt that the spread of the Coronavirus over the past month raises concerns on two levels, the first being health related matters, no one particularly wants to catch it. However, it is the other emphasis that has impacted on the markets, in that we do not know yet how this may affect the growth of economies around the world.

To help, I am going to propose two aspects here that may offer some comfort over the long term.

We know that the virus will ultimately come under control and that it is not uncommon to see health impacts annually through flu-like infections. The economic impact has offered some reflection on how we manage our economies and those industries with large environmental and social impact. Often innovation and new vision arises from such times, and the long-term balance between economic growth and sustainability will improve. In light of some of the global concerns, this must be good news!

The other aspect is purely a focus on the investor and the concerns that may arise from such volatility.

It is important to remember that periods of volatility are quite normal, and growth follows such downturns. It offers a chance to invest at a discount and see the long-term value in high quality investments. It is critical not to panic, but to consider the long-term horizon, and what this means for how your portfolio will support you.

One way to manage any emotional perspective is to always to review what you are invested, and how this will meet your financial goals. If something has changed, then this is a sensible time to review and maybe change the portfolio. Otherwise, it is about remembering what this looks like over the time period you expect to be invested and discuss with your adviser what this looks like.

As if to prove something right, we are already seeing a steady improvement in markets as I write this, with some significant uplift again. However, also remember how we use diversification across different asset classes, regions and industries to defend a portfolio during downturns, and offer growth over the long-term.

If you have any questions on the above or are looking to add to your funds at a time when the markets offer some lower prices, please do contact us.


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