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COVID-19 has clearly become the single most important driver for financial markets over the last several months. After a strong rally from the March lows, equity markets have been range-bound. Investors are weighing hopes of a recovery against fears of a "second wave" of virus cases, high valuations, and US-China trade tensions.
Despite the good start to 2019 for markets, there is still clearly cause for caution. Global growth is muted, earnings growth is slow, the bond market is telling us to worry, and there are plenty of risks which could still upset markets.
The spread of the virus is dealt with using a combination of testing and tracing. Mitigation measures remain in place until Q1 21, preventing the economy from normalizing sustainably before December. Second waves of infection with potentially higher peaks mean intermittent restrictions.
We're in an environment in which investors need to both prepare for near-term risks and position for long-term growth. It might be tempting to try to time the market, but history suggests this is almost impossible. We recommend that investors prepare their portfolios for the current market: Plan and Grow
The starting point for protecting and growing your wealth is having a clear plan, linked to your financial goals. The past six months have shown how times of uncertainty create the potential for very costly or profitable investment decisions. Our Liquidity. Longevity. Legacy* approach to wealth management can help you plan for your long-term goals while reducing the danger of falling prey to poor decisions during periods of market volatility.
The structural changes set in motion by the COVID-19 crisis will pose challenges for investors. But they will also offer opportunities for thematic investing. Seek returns in a Year of Choices and look toward investment opportunities in a Decade of Transformation.
Unless you have been living under a rock, you are aware that 2020 is off to a troubling start. We have seen an 11-year bull market come to an end. Much of the world is sheltering at home in an effort to flatten the coronavirus curve. At the same time, we have seen the stock market values of some of your favorite companies drop precipitously. When panic sets in, like it has for so many people thanks to COVID-19, a few of us see opportunities to fast track our paths toward financial freedom.
If these aren't troubling times, I don't know what is. More than 16 million Americans filed for unemployment in the past few weeks with millions more underemployed or seeing their incomes drop substantially. Americans and people world wide with a long list of health issues are likely to fear for their lives. People are scared, but please don't let your fear cause you to miss out on some great opportunities to not only avoid financial ruin but to build life-changing wealth.
You may be wondering if now is the best time to be investing? Perhaps, you are fighting the urge to sell everything and hide under your covers until this pandemic is behind us. It is easy to talk a good game about being greedy when others are fearful, but it is quite another to do it. There is a reason Warren Buffett is one of the richest men in the world. He has consistently capitalized on bear markets by investing more during those declines while others have been fearful. "The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell." - Sir John Templeton
Bear markets have a way of destroying wealth for many people. That is more a function of how people react to fear than the underlying volatility that goes with being a long-term investor. Everyone is an investing genius when markets are soaring, but when times get tough, getting fantastic investment returns is much more difficult. In many ways, markets are actually the safest when they feel the scariest. The greater the market drops, the more opportunity there is to be had in the future.
Don't worry: the 24-hour cycle won't let up on the doom and gloom of the current COVID crisis. If you wait until there is a consensus that the crisis is over, you may miss some of the most significant opportunities to buy low, and speed up your march towards financial freedom!
"In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts, the Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497." - Warren Buffett.
The essence of being human is to act in the face of uncertainty. What more could be added to the definition of "uncertainty" than the global pandemic, COVID-19, which has put a handbrake on global growth, flooded cyberspace with information and disinformation as well as restricted our movement, gathering and interaction with fellow citizens and, in some cases, even loved ones. COVID-19 has left many of us feeling disempowered from a perceived lack of control in a particularly uncertain time. The perception of control over our environment is not only desirable, but likely a psychological and biological necessity.
This need to take action with our investments, however, may give us temporary emotional respite and the feeling of being slightly more in control of the situation, but at what cost? The long-term effects of our actions may ripple down towards and into our retirement.
Here are three things you need to know about COVID-19 and your wealth in general:
1. The last time markets experienced a similar shockwave was the global financial crisis of 2008. Based on our actual client research, thousands of clients switched to safer investments, ignoring that their investment goals had not changed, only the environment around these goals. Half of the clients who invested during this time, chose to switch, destroying value, and some gave in and totally disinvested, thereby destroying 50% of their asset base. How? Once in safer investments, these clients needed so much reassurance to enter equity markets once more that they missed out on one of South Africa's most sustained bull markets to follow.
2. The biggest threat to your wealth is not COVID-19, but inflation. The market will recover. This is financial physics. Whether you're invested to create wealth, to build up to a retirement goal or even in retirement, longevity of your wealth will depend on generating inflation-outperforming returns. This means that sustained exposure to more risky investments is vital. Bad returns are invariably followed by better returns and the same media exposure that fuels the flames will also assist in generating hype when the cycle turns. The more time you have, the greater your ability to recover from market shocks and participate in the longer-term available growth.
3. For those of us approaching retirement, your fund has likely already been de-risked, assuming a life-stage approach where equity market exposure would have been minimised. Retired investors can minimise these effects by drawing from investments like cash that are far more resilient in such times, leaving time for long-term investments to recover. In times of uncertainty, we are heavily subjected to the "affect heuristic". This is a flawed belief system, where we take action because of our feelings, leaving thought by the wayside. Our portfolio managers, however, are continually assessing how best to manage your investment. Our longer-term perspective and lens will make sure any systematic threat to investment goals is summarily addressed but, as things stand, we believe, from an asset allocation viewpoint, we are well placed looking towards a brighter future. Let us not fall into the market turbulence trap where we pay in long-term returns for short-term emotional comfort. This trap is easy to fall into but equally as easy to avoid. Why not do things differently and focus on your investment goals and desired outcome this time around? Get the outcome you deserve for staying invested.
Just to show the accuracy of the above mentioned, here are some of our latest sessions (more below):
DO NOT FORGET: Every industry is in crisis and will remain that way for a long period of time. Safe heavens are not keeping your money in banks, it's having them creating value in investments that will never suffer. Governments can seize your assets and nationalize banks, like Cyprus did in 2008 when citizens received stocks instead.
The Covid 19 has taught us that safe havens are essential!
During this unprecedented crisis and global market meltdown, there is one thing that we have learned: there is a dire need for security through trouble times. We all remember elders telling us to always keep a portion of our assets in a safe haven. That's because they had experienced their own share of calamities such as world wars. They knew that governments, or economic downturn could make assets disappear in the blink of an eye, and that despair would be the only thing we are left with. Unfortunately, younger generations tend to forget lessons of the past, until this month of March 2020 made their world be turned upside down.
Be it a virus, a war or a geomagnetic storm, Black Swans, as rare as they come, will keep on occurring.
While the figures of Covid-19 fatalities seem to be decreasing in countries which have adopted rapid action, make no mistake, this crisis is here to last. Three days ago, IMF's director Kristalina Georgieva warned the economic fallout from coronavirus is already "way worse than the global financial crisis of 2008". The domino effect of what has been the most brutal market crash in recent history will have ramifications that go much further than just a temporary recession. In the coming months, number of financial institutions and hedge funds, which ironically, were not hedged adequately, will have to file for bankruptcy. Unemployment has risen at an unheard pace. This also means that people will not meet their mortgage payment requirements. Does it sound like a deja vu?
It is true that some industries, such as online retailers and supermarkets will profit from this situation, however the large majority of sectors will be negatively impacted, thus sending the world into a lasting recession. The reality is that we are in unchartered territory and not even the best analysts can give an estimate of how much this series of events will economically hurt us. We only know for sure that it will hurt us quite badly and that we should protect our assets.
We have always done our best to help our clients secure their assets. Thanks to our extreme efficiency model, our service is today what comes closest to safety. We wish everyone safety and health in this crisis!
We live in a constant shifting world! In time of crysis, almost every industry is put on hold. Real estate is halted, Stocks plunge, Index and Oil are tumbling, Crypto is no good! As we have all seen, quite easily the planet can be put on pause! You need CASH to go through this. FOR THE NEXT 3 YEARS all the markets will be in stress mode, experts are saying. It will be very hard to take on proper investments. Just a few examples or hard hits: Dow Jones -31%, OIL -42%, FTSE -33%, CAC40 -37%, BITCOIN/USD - 50%. The chart below is a glimpse of what world markets are taking these days:
There are a lot of people out there who are very keen on the idea of investing, but they keep putting it off because they find the whole process daunting or they just don't know how to get the whole thing started off. Investing is a great way for you to build up an alternative income when you retire, and the earlier you get started the more results you'll be sure to get.
If you have some cash available, you now have a golden opportunity to put it to work. The coronavirus pandemic has wreaked havoc on the markets. But it's also made many investment instruments more attractively priced than they've been in quite a while.
The question of how to invest cash during the coronavirus market meltdown includes the implied question of where to invest your cash.
Few investments sectors were not affected by the coronavirus pandemic and one of them is cash vs cash investments: FOREX market. Regardless of the stock market situation or any other production business this sector will never know the word "crisis".
Unlike the stock markets where in time of crisis the investors cannot sell their stocks and they remain with a bunch of toxic assets, in this market volatility is not a problem and selling what you have or closing a position is 100% certain. In stock market or in futures you need to change the assets into money good to be used in real word. Investments in FOREX market does not know such issues.
If you have the know-how this type of investment is a safe bet. This is were we come up with our mathematical approach of the market and highly accurate trading.
Even with the below statement in consideration, our trading desk managed to achieve an amazing performance in heavy markets, delivering an aprox. 250% NET profit in March 2020 and almost 400% NET profit on a certain account since January 10th 2020. Please check below:
Huge trading opportunities stand ahead and we plan to deliver another 50% - 100% in the next trading operations. Contact us and let's getstarted!
US stocks fell sharply in volatile trading on Thursday as investors worried that COVID-19 may be spreading in the US. Dow Jones Industrial Average fell 4.4%, the S&P 500 Index slipped 4.4% and the Nasdaq Composite dropped 4.6%. The S&P 500 hit the lowest in 19 weeks with its sixth consecutive decline and the largest single-day fall in more than eight years.
This is in contrast to the S&P 500 Index and Nasdaq Composite setting record highs last week. The overnight losses put the three US major indices in correction territory, which is defined on Wall Street as a fall of 10% from their recent high.
Whereas COVID-19 is only starting to appear in economic data, the human toll already is dramatic with disruption to human and business routine via quarantine, work closures and mobility limitations. There is uncertainty, not just about the epidemiological progress of the virus, but on how long and how much routines will be affected and spill over to the global economy. In recent days, COVID-19 has spread quite rapidly outside China, representing a substantial new challenge to the global economic outlook.
The tragic public health shock is at this moment the primary mean of economic dislocation. It is government travel restrictions, quarantines, supply chain disruptions and changes in individual behavior that are primary sources of short-term economic disruption.
As seen in previous global and regional health epidemics, economies typically rebound sharply when the health threat itself has passed. Nonetheless during such periods great trading opportunities can arise. Non Typical trading patterns are created in exceptional market conditions and are the most powerful tools we have in our arsenal at this moment. Each trade care yield a generous amount of profit with range between 50% and 150%, like the previous EURUSD.
We will continue to monitor the situation to determine the best approach of the market for our investors.