At the time of writing we expect that the Government will move to the next stage of there plans for dealing with COVID-19 and that we will all now face some type of disruption too our normal lives in the coming months. As you will be aware we have contingency plans to ensure that we are able to deal with these changes; however, given the severity of what the World Health Organisation has now officially called a pandemic we feel that it would be sensible to postpone any face to face client meetings for the next month. We do want to reassure that you we will more than happy to discuss things via phone, email or video conferencing (Skype or Face Time for example) and that even if we do have to close the office all of us have the capacity to continue to work normally from home.
Moving to investment most stock markets are now in “bear market” territory – which means that they have lost more than 20% of their value – and we have seen some of the steepest declines since Black Monday way back in 1987. The graph below shows that not all Bears are equal! The Financial Crisis took over 450 days to find its low and the Tech Bubble 800 days.
Looking to history is interesting and very important but trying to find comfort or direction from previous experiences will not provide all the answers. The 1987 decline was followed by a strong recovery yet the Tech Bubble and Financial Crisis would see further declines of over or close to 20% when they were already in a Bear Market; in the Financial Crisis we actually saw a decline of over 20% in around 40 days that occurred after the market has been falling for almost a year.
So far our cautious approach geared towards consistency has held up relatively well; the nominal bonds (Gilts and US Treasuries) have benefited from Central Bank Rate cuts and provided positive returns that have gone someway to offsetting the losses in equities. We have seen the resilience in Multi-Asset Funds that we hoped for and Cash deposits continue to provide a “buffer” that at some point will be deployed to take advantage of opportunities. The one area that has surprised us however is Gold; the current climate would seem perfect for this asset however, having been on quite a run rising almost 30% from last September there is of course every chance that we could see a pause or even some declines.