First and foremost, I hope you are safe and well. We are conscious that this continues to be an unsettling time and we want to assure you that we are doing all we can to be here for you and to be measured and decisive with our financial planning decisions.
Our partners at Visual Capitalist have assisted us with an excellent graphic that helps contextualise some of the themes we are reviewing. The graphic, included below and also available in full here, shows some of the initial data coming out of China.
The question on many analyst’s minds is whether this can provide us with a glimpse beyond the pandemic? What is clear is that there has been a significant effect on the Chinese economy. This however is not exactly fresh news. Markets have been anticipating the effect of the virus on economies since mid-Feb. Goldman Sachs have recently produced their own assessment of the impact of the virus on the US economy, which is indicating a 24% contraction in Q2 2020.
Nevertheless, their projections for Q3 and Q4 foresee GDP growth that dwarfs any since 2006, hopefully showing what they expect to come post COVID-19. If even close to accurate this can be partially attributed to the fiscal stimulus implemented by governments around the world and should see investment markets respond positively when the time comes.
Clearly the point of recovery is subjective and is largely unpredictable. The markets will anticipate results and this will flow through into prices. Until it is clear we are through the worst of the pandemic and there is confidence it is under control, we are likely to see markets continue to display heightened levels of volatility.
Second guessing markets is a sure fire way to disrupt the focus on targeting long term returns. Our view is and has always been to stay diversified, stay consistent and if investing new money to potentially drip feed into portfolios with a regular and regimented pattern. Combined with this we look to minimise withdrawals from investments during this time and we will be analysing client portfolios over the coming days and weeks to review this. That measured approach in investing new monies and withdrawing existing holdings reduces risk whilst over time accessing the returns markets have proven to give. Nevertheless data like this, with more to come, helps show a light at the end of the COVID tunnel.
Please feel free to forward our commentary onto friends and family you feel could benefit from it. We are available to guide and advise anyone who needs us during this difficult time. As ever, for any queries small or large please reach out to us at firstname.lastname@example.org or continue to contact your adviser directly.
The Becketts Team
https://www.youtube.com/embed/qAGbxKfNMuE?wmode=opaqueFinally, this video was emailed to us this week. It resonated and brought through some positivity and clarity around where we are but also where we will be in the not too distant future.