- Written by John J Bloomfield
As I am sure you will have noticed over the last week or so we have seen some huge volatility and movement in financial markets. With this in mind, I thought that you
might like to hear my views and thoughts on what is happening.
We are hearing a huge amount on the news at the moment on the impact that Coronoavirus is having on global markets, now I am not going to dismiss this as undoubtedly Coronavirus is the primary cause of the current market volatility, the markets certainly do not like any form of uncertainty and until this is resolved one way or the other we are likely to see days with both significant falls and rises in Global markets.
I would, however, argue that not all industries and locations are affected by Coronavirus at all. Certainly Chinese productivity has been affected and worldwide travel and tourism will continue to be affected for some time to come but the actual biggest impact comes, in my opinion, from the constant media hype which encourages individuals to speculate on the markets. This is a bigger cause of volatility than the actual issue itself.
Many companies in the UK who rely on imports to carry out their operations have accidentally been better prepared than usual for the slow down in global transportation having stockpiled in preparation for potential difficulties with imports and exports following Brexit.
What should we do?
Well as I am sure you realise that sudden dips in the market are the best time to invest and the worst time to withdraw funds from investment accounts, though timing those dips accurately is pretty much impossible.
Investors can purchase investment funds for less than their true value in these dips
and those making withdrawals, unfortunately, receive less than they should and solidify their losses, when they may have bounced back given time.
However we are not seeing daily dips, some days are up and some days are down, so it is impossible to predict when to add and when to withdraw.
My advice as always during highly volatile events is to do nothing, time will negate the impact and in the long term, these rapid rises and falls will become merely a blip on a graph.
However, if you know that you need to withdraw a certain amount of money by a specific date in the future there are strategies that we can employ for clients to prepare you for that withdrawal and limit the impact. Equally, if you are wishing to add more funds to your plan then we can put together a strategy to help reduce the chance of you putting all your money in on an 'up' day.
As ever though if you wish to discuss anything just let me know.