Dear << Test First Name >>
That Wuhan Thing (Part Two)
{We all get way too many emails. This is one of the reasons I don't bombard you with them. However, we live in interesting and unsettling times presently, and I hope you forgive this unsolicited entry to your "Inbox"!}
It's been all of nine days since my last missive to you. Things must be really out of control for me to be so verbose!
Actually, things - whilst not totally controlled - seem to be slightly more settled than they were just over a week ago. Our current Chancellor has announced a raft of measures designed to bolster the UK economy. Will these work? Who knows. But action is being taken. Something is "being done".
Recession and Recovery
It is unavoidable that the global economy will enter a recession. Technically we might already be in one, so sharp has been the downturn in economic activity. This will be the next phase of the news cycle and coverage of it will be remorselessly wall-to-wall.
Economic cycles are a fact of life. I don't minimise their unpleasantness, and if you're at the sharp end of a struggling business or sector, knowing that things will eventually pick up is cold comfort.
But things will pick up: and - based on the last century or so - the values of The Great Companies of The World will rebound long before it is obvious that the economy is recovering.
This is because stock markets are based on anticipation of what the future holds. Yes, they get spooked by unforeseen current events (Covid 19, for example). But in the long-term, stock markets are logically relentless. Capital will be deployed effectively, and patient long-term investors in The Great Companies will be rewarded for their resilience.
The Great Companies of The World were Great before this crisis. They remain Great. They will be Great going forward.
Rest assured that when (not if) markets recover it will not be covered by the media! The Fourth Estate will have moved on and will have its Eye of Sauron-like focus on real news, such as who is currently paying for Harry and Meghan's security detail, or which pronoun we should be using that week for gender-fluid people (I can't even believe I'm typing "gender-fluid").
I'm In This With You
Already I'm hearing horror stories of advisers heading to the bunker, advising clients to sell-out, to turn paper losses into real ones, because "this time it's different", because "they just can't take it any more." Excuse me but that is a flat-out abrogation of duty.
Your investment portfolio is a direct function of your financial plan. And if your plan doesn't change, your portfolio doesn't change. We (I / you) cannot predict which way markets are going to go. So we don't try.
I invest for my future self in exactly the same way as I invest for you. I am in the same Model Portfolios. I have exactly the same underlying exposure to the Great Companies of The World as you. In fact, I increased my equity exposure to 100% last week in my ISAs, pensions etc. Buying on the dips, and all that.
As I wrote on 9th March I do not deny your fear. And I want you to know that I can understand your fear. But I won't in good conscience let you act on that fear.
Humans are remarkable. Humanity is remarkable. Our capacity for resilience and ingenuity is insatiable. We will get through this.
As Before: I'm Here For You - And Your Friends
In the Great Financial Crisis of 2007-9 many investors were left adrift. Suddenly their adviser was not returning phone calls or emails. Or - even worse - their adviser was changing tactics, was suddenly narrating a different story (see above).
You may know friends and family who would welcome speaking to a professional during these challenging times, someone who has been around the block once or twice. If so please do pass on my details.
And of course, if you want to, get in touch. But please don't expect me to tell you when the current Catastrophe of Catastrophes will pass. Because I don't know. For that matter, neither does anyone else. But I do know that it will pass - and that's all that matters.
(Yes, that last paragraph is pretty much how I signed off my email of 9th March. I repeat it because a) I mean it and b) it's the truth as I see it.)
Thank you for your time. Take care. And remember:
None of this is specific personal financial advice. Should you act on the contents of this email without first reading your own body weight in Key Features documents, personal illustrations and fund factsheets, you may well be struck down by lightning.
Nick Lincoln
Director
