BEHOLD A WHITE HORSE

We have all experienced a difficult week, with the fast-moving spread of coronavirus, and the inevitable reaction of markets to this. For most of us, it is the financial consequences that will be more likely to affect us directly, but it doesn’t mean that it’s any less alarming.

In the modern era, we have far greater access to world news at just the click of a button, or from flash news alerts on our phones. This is not always a good thing as newspapers and websites publish news stories that will attract readers. It can be all too easy to focus on these stories and get gloomy, disheartened or uncomfortable about the reported danger to life, society, or wealth of these threats. The coronavirus outbreak, while very immediate and extreme, is just the latest of these.

These world and health events have happened throughout history. Over the past 20 years alone, there have been many material events that we may have felt uneasy about at the time. During such times – at least from a market perspective – it can help to look at the past to ease our concerns. The past may not, of course, repeat itself but markets have been remarkably resilient, as you can see from the chart below.

Figure 1: The relentless rise of markets over time, despite world events

Data source: Morningstar Direct © All rights reserved. MSCI ACWI NR USD in GBP (developed and emerging markets)

It is important to remember that in an efficient market current world events and investors’ views are already factored into share prices. As difficult as it can be sometimes, we need to remember to keep our emotions in check, believe in the robustness of our portfolios and continue on our investment journey with a long-term view. Future news may make the outlook brighter or gloomier. No-one knows. From a personal perspective these things are worrying, but we live day to day with many higher risks such as driving to work or catching the flu, which infects 1 billion people worldwide every year. One of my favourite quotations, which I have used on this blog before, is ‘This too shall pass’. As ever, but perhaps particularly at a time like this, please do get in touch to discuss any concerns you may have, whether about the current financial situation, or about any other financial planning concerns you may have. We are here to help and support – do make use of us. Kind regards David Crozier CFP Other notes and risk warnings †First attributed to Attar of Nishapur, but widely quoted by many others, including Abraham Lincoln and the legendary investor and founder of Vanguard, Jack Bogle. Please note that past performance is not a guide to the future, the value of an investment and the income from it could go down as well as up. You may not get back what you invest. Use of Morningstar Direct© data © Morningstar 2020. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is no guarantee of future results.

Risk warnings

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted