Branwell International View On Making Investment During The Time Of Coronavirus

Top Quote “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” End Quote
  • (1888PressRelease) March 19, 2020 - It's important to remember that the selling frenzy that has captivated Wall Street in recent weeks may not be over, and anyone who says they can time the bottom simply isn't being honest.

    That said, after losing a significant portion of their market caps in recent weeks, each of these blue-chip stocks has solid long-term businesses that will come roaring back when the coronavirus pandemic has run its course. Investors who scoop up shares at these depressed levels will look back several years from now and be very glad they did.

    But regardless of your investor profile, the most important thing is getting invested in the first place and allowing your hard-earned money to work for you.
    'Of course, there are going to be ups and downs but over the longer-term, studies highlight the benefits of being invested through market cycles.

    'Furthermore, powers such as compounding will help build your capital over time. The earlier investors start, the more time these powers can generate healthy returns in the long term.'

    Should I be concerned about my savings in the long term? The short answer is no. While the coronavirus will likely continue to rattle markets, this doesn’t necessarily mean long-term investors should be overly concerned. This is because volatility in the stock markets is normal and markets often rebound quickly once immediate issues are resolved.

    Branwell International investment director, Richard Hayes, says: ‘The world always carries uncertainty and there is enough of it about.’ He adds: ‘The trouble is that [stock] markets generally trend upwards over the longer term, even though it’s not unusual for them to fall by 10% over a short time. ‘The FTSE 100, for example, has regularly fallen by 10% since 1990, though it’s relatively rare for it to fall by more than 20%.’
    Richard Hayes says that at times like this ‘it’s important for investors not to panic’. He adds: ‘Anyone investing in the stock market should be thinking in terms of five years or more, rather than weeks or months, and that is the context through which to view the current turbulence.’ Furthermore, the Chancellor announced a series of measures to protect the economy amid the coronavirus outbreak in the Budget on 11 March. But it’s important to bear in mind that it isn’t clear how much of a positive impact this will have.

    Tickr founder Tom McGillycuddy says: ‘Unless the UK and US government embark on a big fiscal program, like in some of the Nordic countries, we are in for multiple quarters of retraction. ‘But, with some big fiscal intervention and proper short term hardcore social distancing, we could bounce out of this much quicker.’ Ultimately, the long-term impact of the virus on investments is impossible to predict.

    We don’t feel pressured to do anything further. The more rational we are, the better decisions we’ll make; thus we’ll continue to stick to our process. We’ll continue to dispassionately identify high-quality companies, value them, and figure out how much margin of safety (discount) we need. We may make small tactical tweaks to our buying process. We’ll be buying in smaller increments. Instead of building a position through one or two purchases, we’ll buy in smaller sizes, because uncertainty induced by the virus may result in greater volatility and thus better bargains.

    During market meltups and meltdowns, emotions can start to impact your time horizon – that’s very human. During a market meltup, the time horizon extends from five years to 10 to forever, while during meltdowns it shrinks to months and then weeks. With every investment decision we make, we are looking five- to 10 years out. This time horizon is deeply embedded into our investment process, and we believe this is the only way to invest. When we look past the (possibly) ensuing recession, the view is incredibly liberating.

    It is possible and even likely that the headlines will get worse before they get better, but any economic crisis in the U.S. probably isn’t going to look anything like it will in China, and this virus will eventually die out. That is what viruses do.

    Our ultimate goal is to continue to keep our emotions (fear and greed) in check and to remain as rational as possible, even when the world around us is anything but.
    When looking for money-making opportunities in uncertain times, Richard said it’s vital to remember the core investing strategies: go gradual and diversify.

    “Market volatility is something that investors should be prepared for, despite the recent volatility being quite extreme,” he said. “Start small and ensure (you) are diversified across major asset classes (equities, bonds, cash and gold) and major regions/sectors.”

    Jennifer Cheong, head of financial planning literacy at Branwell International, agreed that periods of volatility can be a good time to enter the stock market and gauge your risk tolerance.

    However, she added that it’s not for the fainthearted and recommended following four key pillars.

    1. Contribute gradually — Invest a fixed sum regularly into the same investment product over a long-term period. This allows you to buy more units when the cost is low, and less when the price is high. It’s a strategy known as dollar-cost averaging.

    2. Take advantage of compound interest — Time in the market is more important than timing the market. Earn interest on the interest you receive by sticking to a disciplined investing plan.

    3. Diversify, diversify, diversify — Consider low-cost, passively-managed index funds or exchange traded funds (ETFs), which give you exposure to a broad range of stocks.

    Jennifer Cheong noted the current market dip can provide an especially good opportunity for young investors who have a long timeline to play with. People who invested consistently during corrections and when markets broke performed even better than those who withdrew during corrections and did nothing during break-even periods.

    Meanwhile, those who already have a stake in the market should hold tight,.
    “Times like these stress test not just the market, but individuals too ... Try not to be swayed by your emotions. Unless you have an immediate need for cash, do not sell your assets out of panic,” he advised.

    While financial experts expect the downturn to continue in the near term, most agreed that markets will recover over the next few months.
    “History has shown that the markets bounce back time and time again,” said Richard Hayes.

    Jennifer Cheong agreed, noting that the underlying economic indicators in the U.S. and China are strong, and recent events are likely to “delay but not derail” that growth.

    China, in particular, has shown positive signs of recovery, having recorded a drop-off in new virus cases over recent days, he continued. Meanwhile governments elsewhere, including in the U.S., have implemented proactive fiscal measures to support their economies.

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