There is a virus going around and it seems to me like it has two different effects on people. In some it creates a shortness of breath, raised heart rate, dizziness and a sense of panic. Strangely in others it creates a feeling of opportunity or indifference. I am of course referring to the Investorus Panicus virus which I am sure you will be able to translate from the Latin!
Market movements like we are seeing just now occur on a semi-regular basis, however it is twelve years since we have last seen one like this which means there are a heck of a lot of investors out there for whom this is a new, and scary, experience. In fact it is a bit like the reactions amongst the populace to the Coronavirus.
I must admit I do find some of the recent panic slightly strange. We live with a virus that annually infects 1 billion people and ends up killing between 250,000 and 650,000, it is called Influenza, yet this doesn’t seem to influence share prices. In Scotland we have 22 people every week die from a cause wholly attributed to alcohol, and 96,000 people a year in the UK die from a smoking related disease (Source – NHS Scotland and ASH) yet both drinking and smoking are legal and these companies are amongst the largest in the FTSE 100 index.
At times like these it is probably worth taking some of the health advice that is being handed out to those that fear they may have caught the Coronavirus. “Self-isolate” yourself by refraining from looking and worrying about the value of your investments. Just now, just like somebody that catches a virus, they are under the weather and are in Scottish terms “peely-wally.” They are not in good health but with time they will get back on their feet.
When you are ill you avoid going out unless you really have to and the same advice applies to your investments when they are under the weather, i.e. unless you absolutely need to access them leave them alone. This is why we always try and ensure you have a cash “buffer” to avoid you having to take capital out of your plans when they might be better in “quarantine.”
Now of course I have no idea when the markets will feel better and like any illness they may get worse before they get better but get better they will. This is why experienced investors view this as an opportunity, to their minds the panic has meant that companies’ shares are now on SALE, trading over 10% cheaper than they were less than a week ago.
I am fortunate as I am one of those people that the virus does not affect negatively, but the last piece of advice is if you do come across someone suffering from Investorus Panicus keep your distance as it can be highly contagious!