Are Markets in the Toilet?

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COVID-19 (Coronavirus), America’s next president, Brexit, Property, Oil Prices, Investor Panic… What does this mean for investors?

These current issues have consumed thoughts and conversations across the globe. Many of these issues are real threats and having major impacts on trade, markets, peoples’ lives, their emotions and the supply of toilet paper.

Social media is no doubt having a field day, rife with stories, memes, outrageous and hyperbole feeding into the panic and anxiety of people. We seem to have lost their minds and perhaps our bowels.

I am not trying to belittle the severity and impact of these invents but we do need to stop and think what our role is in this and how we should be living. Can I really change property prices or the price of oil? Is my hysteria and panic going to make any difference to the outcome of these events? Probably not.

Like with the election of Trump people thought the world was ending along with swine flu, bird flu, Brexit and many other historical events. For those in South Africa, we had the worst drought in decades and our country was ending when Jacob was doing his two-step with the Guptas.

Now we have floods in the east, the Cape is green and Cyril is doing his best.

No doubt many of these events have impacted countless lives and there were huge losses but over time and with some perspective people picked themselves up and balance to some degree was restored.

I still know of people working through their garage of 5l bottles of water in Cape Town. I am fairly certain in time we will see some of the cheapest toilet paper prices in history as the world tries to dump their oversupply.

So now what? Get out of markets, sell our homes, run to hills, stock up on toilet paper… that doesn’t seem like rational sense. No one has a crystal ball but when looking at some of the world’s past events I believe this panic and anxiety may present many opportunities.

For long term investors, there are now global and local companies selling shares in their company at a massive discount. With Oil prices where they are some companies are being forced to fund profits else. There are property and rental prices we have not seen in years. The image below is so relevant now as it highlights to the possibility cycle. We dont know if/when the markets are at bottom but we do know that has prices come down it presents opportunity.

 

Like with the sell-offs during mass panic, fear and hysteria we also need to be wary of overconfidence and folly to buy because we think it is cheap. Some companies dont survive very bear markets. You should still stick to good financial fundamentals and invest according to your needs and goals. You also should still invest according to your risk appetite and always consult an investment specialist.

Understanding investment risk, asset allocations and having a financial strategy is crucial to being able to ignore panic and stick to the plan. It is so difficult to put a value on specialist, objective and independent guidance.

In short for those of you who just skipped to the end. Try to avoid getting on the bandwagon of panic and anxiety. It is not good for your health and it is not going to benefit you in the long term. Instead, keep calm try to evaluate the direct risks of these events to your life and stick to your plan.

Here at Growmatter, we want the best for our clients and we are committed to working together.

If you need answers contact us.
Live Trust Grow Matter

This article is for information purposes and should not be construed as financial advice. Should you require financial advice please contact us info@growmatter.co.za

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