You will probably not have missed the news that the CoronaVirus has triggered mass selloffs in the financial markets across the globe resulting in dramatic falls in all of the market indexes. This may appear alarming however we see this as a short to medium term economic shock that will pass when the virus effects are over. This will lead to a fall in earnings numbers for a part of this year and inevitably a short recession as growth contracts

I recommend we hold our nerve and maintain our long-term strategy. In consultation with the investors we are working with we view this objectively as a severe market overraction. Markets act in this manner when they are driven by sentiment and act in haste (Apple will be guaranteed to still be selling iPhones at the end of the year, as will Diageo still be selling vodka and Unilever bleach). 

• There have been economic shock events in the past. You can see the dates and details of these events and the market impact in the chart below. You can also see the subsequent recovery.

• Given such shocks happen far more frequently than banking crises and the resilience of the financial system is stronger following the financial crisis of 10 years ago, we see far less stress across the financial system overall.

• Your investments are in a mix of shares and lower risk assets such as bonds, gold, property and low volatility funds so your risks are spread.

• We can find encouragement in the willingness for concerted action between governments (fiscal support) and central banks (monetary intervention) and our chancellor, government and Bank of England are taking the lead amongst the western nations in announcing bold action plans to prevent long lasting economic damage from what increasingly looks like an inevitable but temporary public health crisis.

• Global interest rates are practically now zero and we have a huge international fiscal stimulus promised (widescale govt. spending plans).

• Though we expect turbulence to continue as long as investors can hold their nerve then we would expect a strong global recovery sometime later in the year.