A Message From Matt – 29th June 2020

As it becomes clear that Coronavirus is not going away any time soon, we move from the initial panic phase of the crisis into the management and maintenance phase.

If we accept that the Coronavirus pandemic is going to be a marathon and not a sprint, you could use the analogy that we have started a little too fast, running the first 5 miles in record time, but that might come back to bite us later as we struggle to settle into a more consistent pace for the rest of what is still a very long race ahead.

It feels to me as if, in general (notable exceptions being New Zealand and Germany for example), governments were a little too late to lockdown and we have exited lockdown a little too early. Katherine and I were shouting at the news for Boris to lockdown around a week earlier than he actually did, and we also feel that the ‘unlocking’ is coming a bit too early as well.

Others will disagree and if anything is for certain at the moment, it is that Covid-19, just like Brexit before it, is proving to be a divisive issue with people’s opinions largely informed by how the crisis impacts them and their family.

Although this is a vast over-simplification, I would summarise the position as follows:

The more severe the economic pain people are going through, the less they seem concerned with the health implications of the crisis.

The more severe the health impact that people have suffered, the less they seem concerned with the economic implications of the crisis.

Of course, these issues are never binary and there will be a variety of different views on the matter. The other issue is that we will only know which view was ‘right’ (if there is such a thing in this kind of situation) with the benefit of hindsight. I certainly know that I don’t envy the impossible decisions the government is having to make at the moment.

What I would say that we could all do with is a little more understanding. No matter what angle you view the pandemic from, it has touched all of us in some way and caused some form of pain or suffering – sometimes severe, sometimes moderate.

Whatever your view though, I think it is important to remember that other people may have been impacted in different ways.

In my personal little family bubble, we have definitely been more focused on the health implications of the crisis, to the point where we have barely left the house in 3 months. Other members of my wider family are suffering financially and therefore can’t wait for the economy to re-open.

Regardless of your perspective, the one thing that binds us all together is that we are in this together. We have already seen the capacity for human kindness and generosity during this pandemic and hopefully this will continue as we enter what could well be an extended period of ‘tough times’ for certain people.

Above all – stay safe, stay sane and enjoy the sunshine!

 

 

A Message From Matt – 12th June 2020

I had planned to write a somewhat jubilant update today as stock markets around the world have recovered, in many cases to now show positive gains during 2020. Some markets have set new all time highs in the past few days! When you consider what the world has been through over the past few months, that really is quite extraordinary.

As hard as it is to believe, the ‘crash’ only really lasted 3 weeks – most markets started falling on around the 20th of February and hit their low points in the middle of March. Since then, the general trend has been one of recovery and I was all set to write about the old investment rules (time in the market, not timing the market) proving their worth once again.

I was even tempted to add in a sprinkle of ‘told you so’ pointed towards the media who were prophesising Armageddon during that 3 week period of market crashes, but who have barely mentioned a word about the spectacular recovery since then. Even in the height of the crisis, our advice to investment clients was to ‘keep calm and carry on’ and I am delighted that in every single case where I have had one of those conversations with clients, they have heeded our advice and remained invested.

Sadly, my bubble was burst yesterday as the US market took a circa 6% hit due to concerns about a second spike in cases and a less-than-positive update from the Federal Reserve. This morning, we have had some sobering news a little closer to home, with the ONS reporting that the UK economy shrank a record 20.4%.

However, I still have reasons to be cheerful. First of all, despite yesterday’s events, most global markets are still substantially better off than they were just 3 short months ago. If you had told me on 20th March (around when most markets hit their low point) that we would be in a position where the FTSE 100 and the S&P had recovered 22% and our own Balanced Portfolios would be up around 13-14%, I would have taken that!

Second, the fall in GDP was “only” 20.4% (Please note – despite my well-known love of inverted commas, I don’t think I have ever used them so seriously – I know that 20% is a huge number). While this is a big blow, it could have been much worse given the extent to which the economy has been shut down over the month of April. The fact that we managed to maintain 80% of economic activity is a big achievement, I think. The fact that the FTSE 100 rose this morning on the back of the news suggests that the market was expecting worse.

Finally, the recovery has been one driven very much by certain sectors – technology and pharmaceuticals in particular. This means that there are other sectors (airlines, travel, hospitality, car sales etc) where there is still room for a significant recovery to take place, potentially taking markets higher as economies are re-opened.

Please don’t get me wrong – I know there is a still a long way to go before anything gets back to anywhere approaching normal, however I still believe that this crisis is nowhere near as bad as other events that the human race has lived through and ultimately prospered after.

We have better science, better technology and more information and knowledge today than at any point in human history and surely all of this combined progress will get us through this crisis (second spike or not).

When markets are in free-fall, our emotions can sometimes get the better of us and lead us to take irrational investment decisions. However, there is also a second point where our emotions can lead us astray – that time is now – that time is when previous losses have been recovered. I would strongly encourage you to read this article by 7IM to learn more:

 

This post shall not constitute or be deemed to constitute an invitation or inducement to any person to engage in investment activity and is not a recommendation to buy or sell any funds of individual stocks that are mentioned in this post. Past performance is not a guide to future returns and the value of capital invested and any income generated from it may fluctuate in value.

Your Post-Lockdown Life

As we enter the month of June, we find ourselves in an interesting dichotomy.

The UK is beginning to relax lockdown measures as other countries are having to reimpose them, given that they are seeing a resurgence in the virus.

Japan and South Korea are this morning reporting an increase in case numbers and therefore are having to do a U-turn and reintroduce some measures which had previously been implemented.

This gives us some idea about the road ahead and shows that the path is probably not going to be a straight one, but rather a very bendy one with several U-turns along the way.

As we begin to open up though, I think we have also reached a point of maximum risk. Risk both to health, but also to our future’s. Not so much from a financial point of view, but more from a lifestyle perspective – how we choose to live our lives.

I have used this metaphor before, but I am going to go with it again.

At this moment – sitting here on 1st June 2020, picture your life as a mostly empty box. The elements of your life in the ‘old world’ have mostly been taken out of the box by force and are now sitting outside the box on the dining room table.

As the UK begins to ‘open up’. You, yes you, get to decide what to put back in. If the past few months have shown us anything, it is that the things currently outside the box are not necessities. You know the things – the frenetic activity, the perhaps slightly unhealthy lunches while in the city, the putting off things which we know are really important because we are ‘too busy’.

Now, please don’t get me wrong, in the ‘old world’ these things probably felt like necessities. They felt like we had to do them, but we have now been shown conclusively that this is not true.

So, this begs the question. What do you want to put back into your box?

Alongside all the elements of your old life now sitting on the table are the new things that have been added to your life since lockdown began. Some of these are good – perhaps weekly zoom calls with the family, more exercise, eating better quality food. Some not so good – too many biscuits in the home office, getting up late etc.

So, on the table, spread out for you to see are all of the elements of your old, pre-lockdown life and all the elements of your lockdown life. The question is which of these things do you want to keep in your life as lockdown eases?

I suspect for many of us, there will be elements of both that we would like to carry forward into the future.

I for one am desperate to get back to a restaurant for a meal out. This is something I enjoyed before but will truly savour in the future (although I certainly will not be rushing to do so when the doors open – wait and see is perhaps the best approach with something as unpredictable as the virus). I am also keen to get back to face-to-face meetings in the office, although I think we all acknowledge that may not be possible or practical for some time yet.

I am keen to maintain the now-every-day exercise routine I have implemented and continue to connect with friends and family more frequently as we move forward.

I suspect that I will also be spending more time on Zoom and other online conferencing tools as we move into the brave new world – I just hope it is not the whole time.

What we keep and what we leave behind can be conscious choices, but these choices can also so easily be made for us. Made for us by the world outside, by external forces, by our bosses, by our friends and family.

My hope is that we don’t sleepwalk into this new world which we are going to find ourselves. That we don’t just wake up one day and wonder what happened to all of the ‘good bits’ of lockdown.

There is a real risk of that happening over the next few weeks as the economy starts to re-open in many cases with little to no notice.

Dentists are a great example of a profession which might be catapulted from zero to 100 in very little time indeed. Having had little information on the re-opening of practices for months, there is now an expectation that they will be ready to open a week on Monday.

So, as our activity, both vocational and social, starts to ramp up over the coming weeks, I just hope that we can choose the best bits to carry forward into our ‘new lives’.

This is perhaps a once-in-a-lifetime opportunity for us to re-invest how we live and work. I just hope we make the most of that opportunity.

A Message From Matt – 7th May 2020

So, it seems that this weekend will see at least some, subtle relaxation of the current lockdown measures and Boris Johnson’s announcement on Sunday will signal the start of the slow and gradual return to our ‘new normal’ – whatever that means.

I wanted to share some thoughts about what that might mean for markets and for us as a business.

Markets seem to have been fairly resilient thus far given the scale of the crisis we are dealing with. Investors who held their nerve early on in the crisis have now been rewarded with a significant recovery in investment values, although markets clearly still have a way to go to reach their previous highs.

The markets seem to be buoyed by the gradual lifting of restrictions across the world and let’s hope that this process can continue without causing a ‘second spike’ in cases.

I imagine this recovery will be one of winners and losers as different sectors of the economy get back to normal at a different pace. Of course some businesses are thriving in this environment and these companies generally won’t receive the same level of press attention compared to those who are sadly struggling, but just remember that they are out there, quietly working away, getting the economy back on its feet.

On the business front, negotiations are ongoing on our new office space and we have every intention of returning to the central London hub we love so much, as soon as it is safe and viable to do so.

With this said, we will be in no immediate rush given how well our current operation is working and so we will most likely adopt a ‘wait and see’ approach once restrictions are lifted and we will take client feedback into account to determine the timing of the full reopening of the office.

What the last few months have shown us is how generally successful online meetings can be and we will certainly retain this as an option for people who are not comfortable travelling into London in the first instance or for those who simply wish to save themselves a trip. We have also found that video conferencing is a great way to connect with clients to discuss those ‘ad hoc’ issues where there is some benefit in a face-to-face meeting, but perhaps which don’t justify a trip into London.

In the interim, we may also offer home visits as an alternative to a meeting in the office for a limited period where this is the preferred option.

I am delighted to report that Buckingham Gate has enjoyed a very good start to the year and I consider myself extremely lucky to be running a business that can operate relatively normally under these circumstances. I am incredibly proud of how the team have adapted to their new working environment and I am pleased to report that everyone is safe and well.

Finally, I am grateful for the way that you, our clients have responded to the current situation. We have received many messages of thanks for the support that the team have been providing to clients during this challenging time and these are gratefully received and appreciated.

As always, if you need any support, please do not hesitate to contact us.

A Message From Matt Smith – 9th April 2020

As we head into the long Easter weekend, I wanted to provide you with a further update on the markets and provide some more of my views on the future.

Many articles I have been reading recently have been talking about the ‘new normal’. Despite how quickly us human beings adapt to new situations, I am a little concerned that we are referring to this current state of affairs as ‘normal’.

I do believe that there will be a ‘new normal’ after the worst of the virus is behind us, but I certainly hope that this is not it.

However it is interesting to note just how comfortable we have become with our new way of living after just a few weeks. After the initial panic and pandemonium, we tend to calm down very quickly, rationalise what’s going on and then deal with the problem and begin implementing solutions. It is easy to see this phenomenon in action across all sorts of different business sectors and industries.

In our own business, we have transitioned the entire team to a home working environment, pivoted our usual monthly seminar programme online, presented to over 600 people and implemented new estate planning solutions via video link and phone calls, all in the last 3 weeks. I never could have imagined how quickly all of this could have been achieved, but necessity is a powerful thing.

I take great comfort from this. The fact that we can build a 500-bed hospital in the Excel Centre in 9 days, the fact that the Mercedes Formula 1 Team can build 1000 assisted breathing devices in a day and the fact that we can come together and applaud our NHS heroes at 8pm on a weekly basis just shows what is really possible when we strip away our self-imposed bureaucracy and red tape and just focus on the task at hand.

I am also pleased to report that we do seem to be seeing some tentative signs that the market is calming down slightly. I’m sure there will be some more surprises to come, but the markets have been a little bit less choppy this week and let’s hope that continues.

I wanted to end on a positive note and share a video with you that touched me a few days back. These times are undoubtedly tough, but there are positives to be taken out of all of this as well. I will leave you with this short clip to hopefully lift your spirits as we go into the long weekend: #WeRemember

Comfort Reading For Uncomfortable Times

We are currently living through some interesting and unprecedented times and it can be difficult to gain perspective when we are in the middle of a crisis.

We have curated some articles and resources below that should allow for a more rational view of current events and this content will hopefully provide some reassurance for those of us who are struggling with the daily news feed at the moment.

Curated Resources

1. S&P 500 Crash Recovery Timings

This document shows the performance of the S&P 500 since 1926 and, most importantly, the relative length of ‘bull’ (positive) and ‘bear’ (negative) markets. The good news is that bull markets tend to last much longer and generate much greater returns when compared to the relatively short-lived bear markets. To support this, you can also download our very own ‘How The Market Works’ document here.

2. FTSE All Share Crash Recovery Timings

The theme here is the same as above. The key thing to note here is the shaded areas, which show the times of crisis or recession. Note how the stock market recovery often starts while the crisis is in full swing. For example, the 2nd World War lasted from 1939 to 1945, but the stock market recovery began in the middle of 1940 – almost 5 years before the end of the war. This same pattern can also be observed during the financial crisis in 2008/09.

3. Fidelity document on missing the best days in the market.

We have shared this document many times before, but the message holds true. If you miss the best few days in the market, even over a long period, you significantly damage your total returns. If we look back 15 years from now, it’s not hard to imagine many of the best days being in 2020 given the volatility of the market.

In fact, yesterday (24th March 2020) is now on record as the 2nd best day in the history of the FTSE 100. This just goes to show that the best days often come on the back of the worst.

Curated Articles

We have summarised some of the best new (and old) articles about investing in times of crisis.

Stock Market performance in previous outbreaks

50 Previous ‘Crash’ Events that the market has ignored

We Will Get Through This

The Market Always Goes Up

Recommended Reading

If you are looking for something more substantial to fill a day at home, we would strongly recommend the following book:

Factfulness – By Hans Rosling

We have suggested this before, but this has to be our number one recommendation for those wanting to gain perspective on seemingly extreme events and the way that the media report on them. An essential read for every human being on the planet.

The Financial Conduct Authority does not regulate Estate Planning, Tax Planning, Will Writing, Trust Advice, or some elements of Automatic Enrolment.
This communication is for general information only and is not intended to be individual advice. It represents our understanding of Law and HM Revenue & Customs’ practice. You are recommended to seek competent professional advice before taking any action.

Please note that investments can fall as well as rise and any income generated by an investment can fluctuate over time.

Matthew Smith’s Thoughts on The Pandemic – 20th March 2020

As we begin to come to terms with our new way of life, many clients have been asking me for my personal views and opinions on the current situation and where I think things will go from here. As such, this is a collection of personal thoughts on all sorts of issues which I hope you will find comforting and reassuring at what is clearly a difficult time for everyone.

The Current Situation

As I write, the markets are in turmoil, most people are working from home and we are panic buying and stockpiling loo rolls. I do appreciate the severity of the situation, however some of these moves (I saw a chap at Tesco a few days ago purchasing at least 200 loo rolls) are being overdone and overblown, in some cases to epic proportions. I have the same feelings about the market reaction which I will come onto in a moment.

I believe we are fast approaching the point of ‘peak panic’ (although we are not quite there yet). In the coming day or two the schools will close and I strongly suspect that we will enter a period of enforced lockdown, much like we have across Europe. Once these measures have been announced I suspect the panic and irrationality will have one last hurrah and then, slowly, gradually, we can begin to rationalise and come to terms with our ‘new normal’.

It is said that stock markets climb the stairs and take the lift down and I feel the same will be true of our feelings and reactions to this current crisis. At the moment, things feel very new and the change is unnerving. But, over time, we will get used to the new way of working for a time and gradually things will return to normal (it is just that we don’t know exactly when that will be).

The gradual return to normality will receive little media attention and we won’t feel it nearly as strongly as the painful changes we are making to everyday life now, but, slowly and surely, it will happen.

Human emotion is strong. We are not always rational creatures, especially when faced with a threat to our health and the desire to feel like we are ‘doing something’ is great. We have to remember that the people who trade billions of dollars on the global markets are human beings too and will suffer from all of the same fears as the rest of us and this will no doubt impact on their decision making (whether they realise it or not).

The Virus

As as starter for 10, I am not an epidemiologist and I do not have any scientific qualifications of any kind, so my views on the issue of the virus are very much from a layman’s perspective.

The health issues caused by the virus are heart breaking and there have been some harrowing scenes playing out on the evening news. We have to remember that these are a minority of cases, however that does not make it any easier to watch. My thoughts are with anyone personally impacted by this situation.

In order to see ‘light at the end of the tunnel’, in my view, one of two things will need to happen:

A – We develop and deploy a vaccine.

B – We develop so called ‘herd immunity’.

In reality, I suspect that it will be a combination of both of these factors that sees the end to this crisis and both will probably happen sooner than we expect (disasters always feel like they will take a lifetime looking forward, but usually seem to pass more quickly in retrospect). There is news today in the papers that the progress of the vaccine is gathering pace and that it could be ready in months and not years. Early days yet, but a green shoot of hope and I certainly have my fingers crossed.

As an eternal optimist and as an entrepreneur, I have every faith that we will get through this crisis and return our lives to ‘normal’ before long. I suspect that ‘normal’ might look a little different at the end of all this, but not that different.

The Market

By now we are all aware that the markets have had a rough few weeks. To think that we were sitting at record highs barely 3 weeks ago is almost unbelievable. The speed with which markets have fallen is unprecedented and, I believe, is more to do with human emotion around the health crisis than anything fundamental.

There will no doubt be an economic impact of this crisis and there will be a hangover, just like in the financial crisis of 2008. This will be one of those watershed events that will be remembered and spoken about for years to come.

Despite the panic, I do personally believe that the sell off has been overdone (based on the facts and data we have available now). A great example of market irrationality is the Amazon share price. Arguably one of the companies who are best placed to do well in this brave new world, Amazon are in the process of hiring 100,000 new workers globally to meet never-before-seen demand. Why then is their share price down circa 12% over the past few days? Because of panic and irrationality is my theory – certainly not because of company fundamentals. I could give many more examples of companies whose share price should be rising, but is not – a tell tale sign that markets have gotten carried away with themselves.

My own view is that we are approaching the bottom (although perhaps we are not quite there yet), although I would not like to predict when this period will end.

What I do have confidence in however is that markets will recover. Markets have always recovered. They have recovered from a great depression, two world wars, numerous more localised conflicts, black Monday (the 1987 one), the dot-com bust, 9/11 and the financial crisis. Why should this be any different?

The other reason that I have confidence that markets will recover is because of cash. One of the main reasons for the markets rapid rise over the past decade or so has been the paltry rates on cash savings since the financial crisis – say about 1% on average. In this environment, for anyone who wanted a sensible return, money has had no place to go but into the equity markets.

This factor, I believe, will be even stronger in this recovery. As of a few moments ago, the Bank of England has just cut rates to 0.1% – the lowest level ever. Given the current situation, I imagine they will be close to that level for a decade or so to come. At the same time the FTSE All Share currently offers a forward looking yield of over 6% (there will be some dividend cuts no doubt, but still). Economically this difference can’t be sustained and when we all emerge from our homes at the end of this, we will want our money to work hard for us – the only place it can go will be equities.

Finally, I am buoyed by the spirit of the entrepreneurial community. I belong to several business coaching groups and the ingenuity being displayed by businesses in finding new ways of working is very impressive. I stayed at a small hotel at a pub on Tuesday and the owner was just preparing to launch a food delivery service in the village to keep his kitchen running if the pub has to close – this type of creative thinking will be happening up and down the country.

In our own business, the reaction to the use of video calls has been incredible, with some clients commenting that they actually prefer this as a communication medium given the significant cost and time savings it affords. While we will always offer face-to-face meetings (nothing will replace that), I suspect we will all continue to use video conferencing more once this crisis is over.

We have also seen a rise in new client enquiries over the past few days as people use periods of self-isolation as an opportunity to get their affairs in order and attend to financial planning tasks that may well have been put off for many years.

Other businesses are also taking similar measures to make themselves more efficient and accessible. For example our legal partners have just introduced a completely paperless instruction taking and drafting service, meaning that we can create new wills, trusts and estate planning solutions for those who need them completely over video or phone call during this time.

Is This ‘Different’?

This is perhaps the most common question people have asked me over the past few weeks. Is this situation different? Do the normal rules apply?

The answer is yes … and no.

Yes – this is different. But only in the sense that every market downturn is different to the ones before it. The 2008 financial crisis was very different from 9/11, which in turn was very different from the dot-com bust and so on.

No – this is not different in the sense that I am sure we will recover from this. It might take 6 months, it might take a few years, but if the markets can recover from everything the world has thrown at them over the past 130 odd years (including many serious pandemics) then they can certainly recover from this.

If you would like some reading to help reassure you (and keep you entertained during lockdown) I would strongly suggest Factfulness and The Righteous Mind. I guarantee you will see the world differently after reading these books.

How We Can Help

Although clients thank us most when portfolios are rising, it is at times like this where we add most value and really earn our keep. The team and I are working harder than ever before and will continue to do so to support our clients through this time. I am proud and humbled by the effort and in some cases sacrifices that the team have made in providing an outstanding service to our clients.

We are in constant contact with our investment partners at Square Mile and other financial analysts and are monitoring and managing portfolios to limit the damage and make the most of the opportunities that exist in this market (and there are always opportunities somewhere).

Our new Zoom video conferencing system is now fully operational and there is something more comforting about seeing someone’s face versus just speaking on the phone. If you would like to schedule a video call to discuss your own situation or just wish to have a friendly conversation while self-isolating, just ask Kayleigh who would be more than happy to make the arrangements.

Comfort Reading For Uncomfortable Times

Next week, we will be sending out a whole host of curated articles and content to help you see through the market and media noise and make calm and sensible decisions in what is clearly an unusual and unsettling time.

We hope that this content provides some comfort (and entertainment) in the weeks and months ahead.

If there is anything more I can do to help you – please just ask.

Yours Sincerely
Matt

Coronavirus – how we are dealing with things

Like many companies across the UK, we are heeding the governments advice and implementing various changes to the way we do business with immediate effect and until further notice.

We are doing everything we can to maintain our usual service to clients and to that end we are implementing many of our well rehearsed business continuity procedures.

Video Meetings
In line with government advice, we will be conducting the majority of client meetings via video call or telephone where possible and minimising face-to-face contact.
If you have a face-to-face meeting booked at the current time, we will be in touch very soon to make alternative arrangements.

Home Working
As of 5pm Tuesday 17th March, we have taken the difficult but necessary decision to close the office and all staff will now be working from home.
We have robust home working policies and procedures in place and all staff have remote access to our telephone system and software packages.
Therefore all of your inquiries will be handled in the usual manner.

Post
Post will be collected less frequently than usual from the office so where at all possible we would encourage clients to communicate with us via email or telephone.

Documents
Along the same vein, we will be minimising our use of paper during this time and will send all communications using digital means where possible.

Protecting our Quality of Service
We appreciate that this is a concerning time for everyone and it seems clear that the impact of the Coronavirus will be felt for many months to come. During this time we will be doing all in our power to support, reassure and advise our clients and their families. We will be using this time as an opportunity to improve and expand on the service that we provide to clients and we will continue to keep you updated on any further developments.

Coronavirus Update – 13th March 2020

It is refreshing to open an update with at least a paragraph or two not on Coronavirus (but more on that in a moment). We are pleased to report that we have completed our analysis of the Spring 2020 Budget document and the impact on personal financial planning is incredibly minimal. Except for some increases to National Insurance thresholds and some tweaks to fringe tax benefits such as Entrepreneurs Relief, there is little in the budget that will have any effect on current planning.

Perhaps if there is one good thing to come from the present situation, it is that we have yet another fairly benign budget from a personal financial planning point of view and this means that the current fairly generous personal tax regime will be maintained.

Back to the virus now and it is fair to say that the market is searching for direction. Headlines from yesterday reported some of the worst stock market falls since 1987. It is interesting to observe that at the time of writing this (which I will quote as 12:28pm on Friday 13th March given the minute-by-minute changes we are seeing) the FTSE 100 is up around 8.7%, effectively re-gaining much of yesterday’s loss.

Assuming it closes at this level (and there is a whole 4 hours for things to change before then!), don’t be surprised if this barely gets a mention in the media, despite the huge reports on falls of a similar magnitude yesterday. This only goes to show just how volatile things are at the moment and how rash decisions can have an impact on your wealth over the long term. The current volatility is almost entirely driven by emotion and not logic. There is almost no conceivable way that the long-term intrinsic value (over the next 30 years) of all of the worlds great companies (think Apple, Unilever, HSBC, General Motors etc) fell by 10% yesterday only to grow by 10% today!

Having consulted with our partners at Square Mile again, the view is now that most markets are starting to offer very good value and there are some real opportunities to purchase the worlds great companies at a significant discount versus where we were just 3 short weeks ago.

Coronavirus Update – 5th March 2020

We wanted to provide a further update on the Coronavirus and how this is impacting on portfolios.

The global stock markets have been incredibly volatile over the past few weeks as investors digest the minute-by-minute updates on the virus and how it is impacting on companies.

In the past 5 working days, we have seen some of the largest ever falls on some stock markets, followed almost immediately by some record breaking gains – volatility reins supreme.

At times like these it is important to remind ourselves of two of the timeless lessons of stock-market investing.

1. You can’t predict the market – trying to do so in the current climate seems even more futile than usual. The virus presents a new and uncharted challenge and it’s path is near impossible to predict. Markets are moving strongly in reaction to each new data point released.

2. If you miss the best few days in the markets, you often permanently damage your long-term returns. Fidelity wrote last year about the impact of missing just the best 10 days in the market out of the past 15 years. You can download and read their previous article on this here.

Given the extreme moves we have seen over the past week, there is a very high chance that at least one (perhaps two or three) day(s) will feature in the ‘best days’ table when we look back 10 years from now and thus, despite the media storm, this period could be one of the most important for your long-term financial success.

We took the opportunity on Monday to re balance portfolios given the significant divergence we have seen between bond and equity markets. Although an over-simplification, in essence this means that we sold bonds which had increased in price (and thus were making up a larger than desired part of the portfolio) and bought equities which had fallen in price.

Given the fairly sizeable recovery in equity markets over the past few days, this move seems to have been well timed and has assisted in the recovery of the portfolios this week.

We will of course continue to monitor the situation carefully over the coming weeks and months and we will write again with any significant updates to the portfolios.

As always, if you have any questions, please do not hesitate to contact a member of the Buckingham Gate team.