21/04/2020
The Uncertainty Continues - What to do?
We are acutely aware that you are possibly experiencing a sense of powerlessness which is probably feeding concern and the feeling of being overwhelmed.
We at Paton & Associates are cognisant of the fact that investment “losses” are concerning.
We have a responsibility to guide you through the current market volatility - thereby ensuring that you do not respond with panic, which will have a negative long-term impact on your investment objectives and your investments in general.
Two Important Points:
● Do Not Sell Low - and Buy High
● Your financial loss is only realised if you sell your assets in the current markets - it is currently a “Paper Loss” only
We urge you to remain focused on your investment objective as this has not changed –
but unprecedented market drivers have!
WHAT HAS HISTORY TAUGHT US?
Those investors that respond with panic, will in the longer term, be financially worse off.
We all recall the 2008 Sub-prime crisis - when the JSE (and markets worldwide) lost approximately 48% of their value.
Some investors sold and moved into “cash” - some stayed focused on their investment objective
The Most important thing is not to make irrational emotionally driven Investment Decisions -
Jeremy Gardiner - Investec Asset Management 11/03/2020
Let us look at the financial effect that this has had on two decisions (Refer to picture)
The Investor who remained calmer and focused - as at 31/12/2019 - has R813 000 more capital - (B-A) almost 47% more than the investor who moved into cash
*This is an actual case study*
This investment climate will pass and investors, who don’t panic, tend to profit from Market “Crashes”
This graph confirms that after every correction/event there is a period of recovery where not only do you recover your “Paper losses” but enjoy a period of sustained growth.
CONCLUSION
We know, and understand, that it is difficult to remain focused in current times - and to turn to Money Market funds, seems to be the less stressful option.
I am here to guide you, so please contact me if I can be of assistance.
David Paton
