Brace yourselves!
As investors face yet more turmoil, these five experts offer advice on what to do next
Stock markets around the world are in freefall as coronavirus threatens to tip the global economy into recession.
the FTSE 100 index fell another 4pc yesterday, taking losses in the past three weeks to more than 30pc.
A total of £729bn has been wiped off the value of British shares in that time. the rout has seriously dented pensions and other investments and left millions of families wondering what to do next.
Here five experts give their views:
PAUL MARKHAM, global equities portfolio manager at Newton Investment Management
It WAS widely believed that the early phases of this market volatility were a healthy correction, as investors marked equities lower after a period in which they had got ahead of themselves.
But as the past few weeks have unfolded there has been a growing fear that the world faces a perfect storm. the economic impacts are likely to be significant, and any bounce-back as the year wears on may not bring bourses back to levels seen immediately before the crisis. Movements in both directions are likely to be extreme for now and equities in particular will remain volatile.
opportunities are already presenting themselves, however, in financially strong companies with multiyear growth and differentiated business models.
Many of these are currently available at materially lower prices than they were a month ago. A strong nerve will be required and it may well get darker before we see the light. But, for those taking a long-term view, attractive entry points are beginning to emerge.
RUSS MOULD, investment director at AJ Bell
THE worst thing any investor can do is panic simply because everyone else is. Difficult as it is, the first thing to do is sit down and go back to why you are investing in the first place. Is it for your first house, your retirement, a second home, school fees or a bit of fun?
that overall goal will then shape your investment strategy. that then shapes your time horizon, target return and your appetite for risk. the younger you are, the easier it is for you to do nothing at all because time is on your side.
this is harder the older you get and the nearer you are to retirement. Don’t over-trade. this racks up expenses and also means you have two decisions to make – when to sell and when to get back in. this increases your risk of error, especially when markets are volatile and you are on the back foot.
Selling now also crystallises paper losses and makes them real ones. the market will turn around at some stage – though no one knows when – and it will be worth looking at companies whose shares have crashed but where the fundamental business model remains competitive, their finances are sound and the management team is strong.
Yes, there could be a downturn in earnings in the near term but well-run firms will get through this and possibly emerge stronger on the other side.
NIGEL GREEN, chief executive of Devere Group
ANY way you look at it, it’s now almost certain that there will be a coronavirus-triggered recession. We can expect it to be deep but short. the slowdown will be temporary. Every recession produces a new world. this one will too.
A covid-19 recession is likely to fundamentally shift how we live, do business and invest. We’re moving towards an era of negative interest rates. Zero or negative rates will help boost financial asset prices and savvy investors will be seeking to top up their portfolios by drip-feeding new money into the market at this time.
they will give more investors more reason to increase their exposure to equities as the money won’t be working for them as cash deposits. new industries will emerge and, of course, there will be winners and losers. this will mean job losses in some sectors and huge, possibly unprecedented, job and investment opportunities in others.
We live in a time of great capabilities and great promise. to build and protect their wealth as the world adapts to a new era, investors should be revising their portfolios to mitigate risk and take advantage of the opportunities.
RICHARD HUNTER, head of markets at Interactive Investor
In Normal circumstances, a positive end to the previous week’s trading and a coordinated central bank effort over the weekend would be enough to provide some solace for investors.
But these are not normal circumstances. From an investment perspective the economic impacts of the coronavirus crisis are yet to be accurately quantified, the oil price trade war remains a concern and the prospect of a global recession is increasingly likely.
As such, the stabilisation in markets which is becoming a more pressing requirement is not yet on the obvious horizon. But normal rules have to apply in these abnormal times. Which, simply, is to bear in mind that if you sell, you are a crystallising a loss.
So it may be a question of riding it out, even though the recovery may be some while in coming.
SURAJ GANDECHA, associate consultant at Quantum Advisory
AFTER the longest period of market growth in history, it now looks like we may be entering a period where greater volatility in the markets becomes the new norm. If you are a member of a defined contribution scheme, this can have a bearing on your savings because your pension at retirement is impacted by the performance of financial markets.
While it can be unnerving, it is very important to keep in mind that investing is a long-term game. If you are far away from your retirement, short-term fluctuations are less likely to have a lasting impact on the final value of your pension pot when you reach retirement.
As has been seen in the past, markets can recover, for example following the global financial crisis in 2008-09. If you are closer to retirement, many defined contribution pension schemes have the option to invest in less volatile assets such as high-quality bonds.
right now, the main thing is not to panic and make any sudden decisions based on the short-term events, but rather to make informed decisions which appropriately consider your long-term retirement aims.