Coronavirus Special Update

Coronavirus Special – Market Volatility Update

Global equity markets have suffered losses during February, especially during the final week. Most of us like lower prices at a supermarket or a department store but with the financial markets it is harder, especially if the fall has already impacted the value of an investment portfolio or pension fund.  History tells us that financial markets – especially equity markets which invest in the shares of individual companies – have bouts of both optimism and pessimism.  Over time – reflecting the rise in global wealth and living standards – optimism wins out.  We see no reason why the current bout of financial market uncertainty should ultimately work out no differently during the first part of the 2020s. 
Current concerns about a COVID-19 possible pandemic is worrying to read about and clearly are having an impact around the world.  Health authorities are responding and the acute awareness now of the virus will drive deeper understanding and ultimately a very high likelihood of control of this issue. Such an occurrence will be welcomed by financial markets and in turn will reward investors who did not lose faith. 
One recent study by a large UK company showed the impact of losing faith.  Attempts to try and move in and out of the financial markets for longer-term investors can have a big impact.  This is because such efforts may mean we might miss periods of strong market performance too, potentially in a period of recovery after a strong bout of uncertainty.  The table below shows the striking impact over the past thirty years of an investor missing out on these good days.  The best way to guard against this is to be a patient and regular investor.  Additionally, a good level of diversification also helps.  Reflecting this a typical portfolio will also have exposure to bonds and other asset classes as well as equities to help smooth out volatility.


If you would like to hear more from our Chief Economist, Chris Bailey, we’re holding our client seminar Thursday, 5th March at Soughton Hall, Northop. Chris will be giving an overview of the markets and will happily answer any questions you may have. Please use the below link to book onto our seminar, or to find out more details.


This article is for information purposes only – should not be perceived as financial advice. We recommend you should always speak to a financial adviser before making any investment decisions.

Please note past performance is not reliable indicator to future returns. 

Your investment may fall as well as rise and you may not get back what you put in.