By: Warren Ross
Time for a brief update
It’s only been about 20 days since the start of market reaction to the Coronavirus. It’s been 11 days since my preliminary comments. Things have been changing fast and furious.
Over the last 11 days, I’ve been able to speak to most of my clients, and we are all pretty much on the same page. To start with, as an investment advisor, I’ve always erred on the side of caution, and most of my clients have an asset allocation that is a little more conservative than what others may suggest. This has provided some downside protection in the recent volatility. Furthermore, most of my clients have a fairly long term investment time horizon, and therefore the recent market volatility is not getting them as concerned.
This being said, one of my clients contacted me last night with thoughts of capitulation and ready to sell. This is normal given all the news and uncertainty of recent days. What I replied is as follows:
Personally, I’m optimistic, and I believe realistic. In my view this is a disruptive situation, but one that is temporary. There are some sectors that will be hit hard, and some that will benefit. I also believe that governments will roll out extraordinary measures to help those who are most effected. However, until you see it, it’s not there.
Whichever way this evolves, people will still need to buy homes, they will still need to eat, cloth themselves, entertain themselves, travel, and basically satisfy their needs and wants in one way or another.
The recent market correction has been super fast and deep in the 20% range. It is possible, and certainly feasible that the market will go down further. This being said, I think we are closer to the bottom, and the rebound will happen very quickly.
What I am recommending to my clients is that if nothing has changed with their time horizon for their investments, to hold on. Most of my clients portfolios contain significant fixed income components, and many of the portfolio managers are starting to take advantage of the recent declines to buy equities at significantly reduced prices. For investors that have additional funds to invest, it is now time to start the discussion to formulate a strategy about how to start making additional investments.
The following is an article on investor emotions. Please scroll down to the bottom of the page: Dynamic: Cycle Of Market Emotions
The following is an article on investing. Dynamic-Investing essentials
The following is a market update by Fidelity investments Fidelity-Coronavirus _ Market volatility and the business cycle
The following is a well written article from CBC on investing: Is the coronavirus ravaging your investment portfolio? Here’s what you need to know
A few words of wisdom from Warren Buffett Warren Buffett’s 4 Rules for Investing in a Bear Market
There are so many other articles I have but this is enough for now. Just to let you know, from the time I started writing this post, I came across two pieces of interesting news:
Warren Buffett: People aren’t driving as much since the coronavirus outbreak This article is just one example of a sector that is benefitting from the recent situation. Car insurance claims have been down recently due to people driving less. This can only help car insurance companies profitability, and potentially lead to lower insurance premiums for consumers. As you know consumers will then spend the savings on other items.
In closing, should you have any concerns about your investments, please feel free to call me anytime.
Mortgage Broker/Mortgage Intelligence
Financial Security Advisor/ Warren Ross Financial Services Inc.
Investment Representative/Quadrus Investment Services