As the world grapples with this global pandemic, we, our country and our world face a difficult time.
A bear market is when the stock market has lost over 20 percent of value in over at least a three–month period. A bull market is when the stock market is in an overall uptrend over the course of months or years. We are now in a bear market as this definition holds true at this time.
How long will the current bear market of 2020 last? And how deep will it fall?
I have no idea. Neither do you. And that’s totally fine.
If it’s any comfort, the average bear market for UK Equity lasts 20 months and bottomed out after a 37% decline! So far, we are c.32% down, and it’s only the first month. We could be heading for a long painful winter but then again, how should I know?
We need to be prepared for markets that could be worse than the average – the bear market of 1972/74 bottomed out at -67% peak-to-trough.
Eminent financial historian Prof William Goetzmann (Yale University) examined what happens after serious market declines in a comprehensive study that spans over 100 global stock markets over three centuries. He concluded that the likelihood of markets recovering to provide good returns after significant crashes is reasonably good.
It looks like we are all going to have to weather this particular storm and I have lived through a few during my working life, the very first being in October 1987! Remember in tough times, those that hold their nerve and don’t panic are the ones the reap the benefits. It may be tough, but we should always keep that thought in our minds.
If you are one of my business owner clients, now is not the time to hide away at home for the next 2 – 3 weeks, it is time to rise and shine and add massive value to your customers. Your clients will be delighted to hear from you and need to hear from you, even if it is just a re-assuring voice. Your job and my job is to keep in contact.
If you are one of my retired clients, there are things that you can do as well. Now is the time to read, work on the garden, reach out to old friends and neighbours. There is still plenty that you can be doing. Especially if you have not been doing lately.
If you have WhatsApp on your phone, this is a great way to have video calls from family and friends. What’s even better, it is free. It’s one thing keeping in contact with your family and friends but seeing them is even better. WhatsApp is perfect for this.
As I am a natural born optimist and ever hopeful for the future, the current situation got me thinking. What are the positives that we can take?
What happens during flu/virus?
It forces us to stop and take a step back. And this is what is happening in the world right now … The virus is forcing us to step back and stop, albeit hopefully only temporarily.
A whole new economy will be created in front of our eyes. New products and new services will be created that will enhance our lives. Downturns are the time for opportunity and more inventions are created during these times, leading to greater growth and developments.
Book a call with me
In the interests of not exposing our clients to any more risks than we really need to, for the time being we have instigated a non-face to face client meeting policy. We are putting in place an online appointment booking system. You will be able to book a call with us and this will automatically appear in my diary. We can either speak directly over the phone or use Skype or Zoom video conference call software.
And finally, thank you for giving us the opportunity to continue to guide you with your future plans and investments. Right now, the world is looking for direction, for leadership and I am doing my best to step up.
We are here to guide and serve you, listening to what you need and to reassure you. My goal for the remainder of the year is to be your ‘Forest Gump’, weathering the storm, doing whatever we need to do.
As Winter always follows autumn and summer – spring always follows the winter – in troubling times, a better time is always just around the corner.
Finally, I had an online chat with a client last week. He said that he didn’t particularly care what had happened to his portfolio. He had just been given very positive news about his prostate cancer. Which really puts everything into context. Wealth is nothing if you do not have life and health.
Hunker down, enjoy a few box sets, good wine, nice food, conversations and love.
I look forward to seeing you when we can.
Mark Beresford
