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Market crashes and recoveries

We firmly believe that the world will beat the Coronavirus and find a cure for it. The issue is at what cost and how long will it take to find a cure. Experts estimate that an anti-viral drug will be invented within the next 3 to 12 months, which will be produced en masse for the globe.

With this timeline the world should return to “normal” by next year and the investment market should be recovering. The three previous stock market crashes all recovered within an 18 to 30-month period.

Annualised return over 3 years after past market corrections

How is this crisis likely to pan out?

Until there is a cure for the virus, fear will grip the world, which will drive irrational stock market prices. We do not know how this fear will intensify or subside, but as long as it exists, investment markets will be volatile. Our prediction is a “U-shaped” recovery. This means that markets will fluctuate until a cure is found, and then recover fairly quickly.

As we believe the world will be back to “normal” next year and a market recovery would have started taking place, one should start taking advantage of these lower prices with a phasing-in investment strategy. Current market prices could still go lower as the fear continues, but in 3 years’ time investment values should be higher than they are today.

At Investonline it’s business as usual (in lockdown from our homes)

With our online capabilities, our team of 8 professionals continue to work normal hours from home. Technology has enabled normal office telephone connectivity and visual meetings using skype and Zoom applications.

We will continue to service our clients as normal with our disciplined culture, values and ethos, which combined with hard work, ensure our clients have the best financial plan for them.

A good time to reflect and re-charge

We applaud our President implementing this severe 21-day national lockdown. These are critical measures needed to flatten the infection curve. However, this may be the start of more isolation measures to come.

This could be a difficult time for us all, but it may be a good time to reflect and re-charge. One is to contemplate how you manage your savings.

If you manage your own investments, you need to ask yourself if you are truly qualified to do so. Or if you have a financial advisor, is the Advisor competent or adequately qualified?

There are so many important aspects to managing your investments: having the right tax structure, estate plan, risk profile, investment strategy, enough liquidity, best administrator, personalised service and ongoing expert advice. This should all be combined into a personalised financial plan that we will do for you at Investonline. Click here to see an example of our investment planning process.

We wish you all the best in these difficult times. We are sure that the world will be a better place when we overcome this crisis.

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