COVID-19 and market slumps – we must be ‘riders on the storm’

The alarming spread of Coronavirus, regardless of how it will all play out has at least been a reminder to us all of our own vulnerability when measured against the forces of nature and a clear reminder that hygienic practices should never be ignored and should be a part of our everyday lives.

It was not only COVID-19 either that sparked a massive market slump, putting South Africa and much of the globe back into a recession similar to that of 2008, but it certainly was a major factor, reminding us that our global financial stability is always precarious and also very much subject to the unexpected.

The one thing that is inevitable is that our lives will always be disrupted by the unexpected and it is exactly why we urge our clients to be prepared for it by factoring it into a holistic short and long term financial plan.

As it stands right now, whilst we are shaken by the recent turn of events we can only remind ourselves of the famous ’Doors’ pop group of the seventies song ‘Riders on the storm’ and the opening stanza that said:

Riders on the storm
into this house we’re born
into this world we’re thrown….

When it comes to COVID-19 and market slumps – we must be ‘riders on the storm’ and here’s a few ways that ‘riders on the storm’ get though a financial crisis and get their ‘stock’ back in one piece…

Expect it to happen

‘Riders of the storm’ are always prepared for the unexpected. This should never come as a shock to you as you know that investing in the markets is not a one day game.

Don’t panic or get emotional

Your cattle and your horses may be getting ‘Spooked’ when lightning strikes, but as an investor you know that lightening seldom strikes twice in the same places. Work with your Financial Advisor to see where there may have been some chinks in your armour and adjust your portfolio in preparation for the next time.

Don’t sell off assets

One of the main things to be aware of is not to sell the herd! These are assets you have worked for and in time they will recover. If you want to sell off some unwanted stock, or see any tax gain from taking a loss, then you can look into it with your Financial Advisor. ’Riders of the storm’ don’t go it alone and neither do you need to.

View the long term and buy if possible

If anything take a long term view. Assess which stock has held its own even through the storm and if possible think of it as a time for bargain hunting! Buy now from panic sellers if you have the cash.

History has shown that market slumps, regardless of their source, have always eventually passed, stocks have recovered and those who were brave enough to ride above the storm have always scored in the long run.

Correct preparation makes for less impact and better recovery

As every athlete can tell you, the correct preparation for any event will greatly reduce your chances of injury and enhance your chances of good recovery. Think of astute financial planning in that way too.

Had you worked with an experienced, qualified Financial Advisor prior to the downturn the chances are that your portfolio would have been varied and designed in such a way as to have built in some cushioning during a time of market crisis.

Expect the unexpected

To reiterate a point made in our last article “Given the alarming extent that the Coronavirus has spread in such a short time just reminds us that the only thing that can always be expected is the unexpected.

Be prepared for any extended period that you may not have an income. If you aren’t, this could have the most devastating effect on any wealth planning you may have been doing prior to when it happens.”

Let the Hereford Group difference make the difference

The Hereford Group don’t just advise on and sell financial packages, because we know we are dealing with people, their hopes their fears, the crises they may face and in particular their differences.

Why not get together with one of our Financial Advisors and ensure that your preparation for your life’s journey, whatever it throws at you, is well enough planned to ensure that you will be getting that big pay out after you have ‘ridden the storm’ and got your herd safely to market.

0 Comments

Submit a Comment

Your email address will not be published.