The 2020 market correction was coming with or without Covid-19, but the scale of the fall in investments values, plus the hit to world-wide and domestic supply chains and trade wasn’t anticipated. Six weeks ago, I sent all my clients an illustrated email whilst the markets were well and truly crashing around our ears. My message was clear: Hold fast! At time of writing now, the markets have recovered a good part of their late Feb/early March falls.
However, I am suspicious of the recovery to date. It seems premature. If one looks at the economic damage that lock-down has caused here and around the world, surely investments portfolio recovery will take at least a year or two.
So, what do you do? If you cashed-in during or after the crash, perhaps expecting worse to come, you may be trying to time your re-entry to the market. My warning to clients was that that is like trying to catch a sharp knife knocked off the counter-top: unless your timing is uncanny you will probably end-up worse off.
Unless your circumstances have suddenly changed, I think the sensible approach is keep your investments in more or less what you had before the crash for the time being. By all means move gradually towards a different long-term portfolio over time if you feel yours was unbalanced or ill-equipped to deal with the last crash, but don’t try and do it all at once.
If you have cash to invest, you might well consider doing some limited buying right now – some call it tranching, or phasing-in – to a target portfolio.
My advice to my clients remains to remain calm, try to ignore markets news and we will see the recovery in due course.
The views held here are my personal views and should not be interpreted as financial advice. I can only advise you after a thorough discussion as to your personal financial position, objectives and risk assessment.