Don't Panic, it's Time to Buy

 We have heard all about Coronavirus in the news and the effect it is having on the financial markets.   All the international markets have been affected.  Originally the fall in the markets was driven down by the blocked supply lines resulting from the total shut down of China.  It was anticipated that this blockage of trade would have a negative effect on the world economies.  Perfectly reasonable.   Next came the shock to the markets by the spat between Russia and Saudi Arabia pushing their oil prices down over night  by nearly 50%.    As the FTSE100 has a high proportion of oil stocks the Index further fell because of the effect on companies such as BP and Shell etc.  Most recently the continued fall in the markets is due to the fear of the possible rapid spread of the Coronavirus.  This is driving governments to make very draconian arrangements which will have serious effect on Trade and Travel and living conditions.

No doubt you may be starting to be concerned with the effect of the falling markets on your investments and pensions and it's only natural to be concerned that their values are falling.  However, bear in mind that it is only the current valuation of those investments which has gone down.

All the economists, commentators and financial experts in the world are agreed, do not sell investments or pensions.  That simply crystallises the loss.  The second point that is strongly made is that the causes and conditions are temporary and that the problems will be overcome.

Besides, the impact on our pensions and investments are not as bad as the falls in the markets, and that is because of the following reasons:

Your pensions and investments are made up of portfolios of different funds invested in different asset classes, such as Government Gilts, Treasuries, Corporate Bonds, Commercial Property and even percentages of Cash.  These types of investments would not be falling in the current situation and in many cases could be even going up in value.

Many of the funds in your portfolios are Managed Funds and these are structured with balanced or mixed assets for the Cautious Investor.  Their exposure to world equities could be only 20% to 40%.

The funds that we select to make up your investment and pension portfolios are always the top performers of their asset classes.  They are selected for their continued top quartile performances by the best fund managers.

The funds that we recommend for your investments, to be the best performers, must obviously contain the shares of well managed companies with strong balance sheets and good reserves.

The markets are falling more heavily than usual, and your investments will have been affected, but rest assured the funds in your ISAs Investments and Pensions will not have fallen as much, and when the markets eventually return to normal, then your investments will be best placed to benefit from the recovery.    However, if you have any major concerns, then please give me a call.

Ray Jenkins