Why it’s crucial to think long-term

WHAT should we be doing as investors? The short answer, says Emma Wall, of Hargreaves Lansdown, is ‘absolutely nothing’.

She explains: ‘Yes, there has been a lot of volatility as markets have reacted to the constant flow of news. But if you look at markets over the past year, you’d be hard-pushed to point to exactly when the coronavirus hit.

Investing is all about the medium to long-term and over that time scale coronavirus is not going to have an impact.

‘It’s similar to what happens whenever Donald Trump tweets about a new trade deal or tariff – there is an immediate impact but it all smooths out over the long term.’

The most powerful comment is from Fidelity’s Tom Stevenson. It says: ‘From time to time, there is volatility in stock markets as investors react nervously to changes in the economic, political and corporate environment. Financial markets dislike uncertainty.

‘Yet markets are prone to overreact to events that cloud the short-term outlook. As an investor, it is important to take a step back at these times and keep an open mind.

‘Avoid trying to time the market, don’t focus on short-term swings – however powerful they may seem – and instead keep investing in quality companies or funds that look as if they will deliver sustainable returns over the long term.’