13 March 2020
Uncertainty around the coronavirus COVID-19 outbreak coupled with the ongoing battle on oil prices resulted in Monday’s market crash - the worse in the United States and the United Kingdom since 2008.
When confronted with extreme market volatility, it can be easy to allow fear and emotion to govern our investment decisions. Human nature compels us to protect our investments and safeguard them against potential loss, however, history has shown that returns, whilst they may not always be linear climbing upwards, ride out the peaks and troughs of the markets to ultimately deliver solid performance. The key to this process lies in cancelling out the market noise and focussing on the fundamentals of investments: a well-diversified long-term investment strategy.
We want to reassure you that the Verbatim portfolios are built to weather volatile market conditions. Our portfolios are designed to manage risk and incorporate optimised diversification across asset classes, ensuring our solutions manage the downside and ultimately deliver solid long-term performance. We remain committed to a patient long term-investment approach that centres on time in the market and not timing the market.
You can rest assured that the Verbatim investment solutions will remain ideally positioned to consistently meet your and your clients' needs, whatever future market developments may bring.
John Husselbee, our Verbatim Portfolio Growth Co-Fund Manager, has compiled commentary to share his views on the current state of the market performance.
“It has been a brutal start to the week for financial markets and little surprise that commentators are already dubbing yesterday as another Black Monday. I remember October 1987’s Black Monday well, which came a few days after a storm ripped through the country with little warning. The lesson back then, and indeed from similar market conditions ever since, is not to panic and stick to your long-term portfolio strategy.
In the short term, corrections in the market are hard, if not impossible, to predict but you can be prepared by focusing on the long term. There will no doubt be buying opportunities from the indiscriminate selling of assets once the dust settles. However, in the meantime, we will continue to maintain what we believe to be the appropriate portfolio diversification for each risk profile as we endeavour to deliver the best returns for patient investors.
Finally, economic conditions may change over time, but the emotions of fear and greed are a constant factor in daily market moves. Over Monday 19 October and Tuesday 20 October 1987, the FTSE 100 fell 23%, still the only two 10%-plus daily falls in the index’s history, but over the subsequent five years, it produced a total return of 74.8%.”
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The value of investments and any income from them can go down as well as up and is not guaranteed. Your clients could get back less than they originally invested. Past performance is not a guide to future performance. The portfolios' investments are subject to normal fluctuations and other risks inherent when investing in securities. Verbatim Asset Management has taken due care and attention in preparing this document, which is solely for the use of professional advisers. Verbatim cannot be held responsible for any inaccuracies arising out of information detailed within and will not accept liability for any loss arising out of or in connection with its use. This article is for information only and should not be deemed as advice.