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Coronavirus - Covid-19: Market update

stocksCoronavirus – Covid-19 appears to be receding in China but taking hold and indeed accelerating everywhere else around the world.

Our thoughts at this time are with everyone who has been directly or indirectly affected by the contagion. It will inevitably be a difficult period for all of us in the UK, especially if the situation in Italy is replicated here in the next 10-14 days, which as I write is looking increasingly likely.

We must continue to adhere to the advice and direction of the public health experts in Scotland and the rest of the UK and act and behave accordingly. This is not a time for amateur assessments and for that matter some of the bad news peddlars we are seeing daily on our TV screens and in the online and print media. We know that bad news sells and some journalists have a canny ability of making bad news seem a whole lot worse than it actually is or will be.

You’ll be aware that in response to the outbreak that stock markets around the world are in an anxious mood are re-positioning to the downside. We have seen some dramatic falls in recent days as the markets are trying to come to terms with the shock and those shocks that are still to come.

So, I wanted to make you aware of our thoughts and to remind you that we’re here if you have any questions or concerns.

The ebbs and flows, and highs and lows, of stock markets are perhaps the only thing we can safely say are a given. Cutting and running may be on the mind of some, but it may not be the correct medium, or for that matter short term strategy.

Irrespective of how Covid-19 plays out, our advice will remain consistent. Don’t try and MACO TPL business finance chartsecond-guess the markets and don’t let short term market volatility distract you from an asset allocated, diversified investment strategy.

As we have never been through this type of event in most of our living memories in the UK, nobody knows exactly how it will unfold and what the impacts will be for equities, inflation, interest rates, etc. despite what some are predicting in the media. There is no past performance, there are no precedents and the future is impossible to predict.

Invest for long enough and you will experience markets rip-roaring at their peaks one minute, to then suddenly come hurtling down before anyone can sound the warning bell. The when is unknown, as too is the why, but we know they’re inevitable.

Since 1975, the UK Stock market has fallen by 20% or more nine times. Each time going on to record new highs and considerably higher stock market valuations in the years that followed. So, keep in mind the long term time frame.

We don’t doubt the resilience of UK companies and predict that they will navigate the impacts of the Covid-19 successfully. Over the long term the stock market has grown even with short-term setbacks – though there are never any guarantees and past performance is not a guide to the future.

It is nigh on impossible to second-guess when is the best time to enter or exit the market, as the speed at which markets react to news, good and bad, means that stock prices have already absorbed the information.

With any long-term investment strategy, having a mix of investments is key. At any point, there’ll be certain sectors or regions that are doing better than others. A portfolio moving in different directions is actually a good thing. It shows that you aren’t exposed to all the same risks.  

Investors with diversified portfolios, who stay in the market, have historically and 19942 MACO Tax Planning 39consistently experienced steady gains over time. Perhaps the most important lesson from the past 30 years of stock market volatility is that heavy falls in markets end up being little more than a stumble in the market’s long term rise. Although this cannot always guaranteed.

So, our advice is to ignore the noise and daily market speculation and movements, and focus on the long term. It’s also important to remember that volatility also presents buying opportunities. Regular reviews provide the opportunity for ongoing discussion and assessment of appetite for investment risk, investment time horizon and investment goals.

Rest assured, we will be very aware of every market movement, but at the same time we won’t overreact to what can often be just noise.

If you wish to discuss any aspect of the current situation then please do get in touch with your Martin Aitken Independent Financial Adviser >get in touch

Spring Budget 2020
Acuity Financial & Tax Spring 2020

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