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Stock markets falling, should I sell?

By Charles Hutchinson - Topics: BREXIT, Investment Risk, Spain, Stock Markets
This article is published on: 6th March 2020

There are four big subjects dominating the public arena at present: life after Brexit, life after the coronavirus, life after climate change, life after the dramatic falls in the global markets.

We live in an interdependent world where news is instant across all continents (although I’m not sure whether the penguins are interested). We are aware of climate change, the antics of Widow Twanky Trump, the spread of the coronavirus and Brexit (an outdated game in which the British people have kicked off in the hope of a repeat performance of their imperial past). Hopefully we have taken onboard the catastrophy of climate change in time (not Widow Twanky, yet) before we are reduced to a desert of Mars proportions. Hopefully the coronavirus threat is a storm in a teacup. Hopefully Brexit will work out. These are all uncertainties – except one: the global stock markets.

All life is cyclical; this is enshrined in history. Take any historical event of extreme proportions; the pendulum will at some point begin to swing back the other way. The only possible exception I can think of is the reincarnation of the Dinosaurs and the Dodo. There will be other tyrants, exterminations, plagues and climate changes at some point; but in our lifetime at least you can depend on the markets bouncing back. Why? As I have described in other articles, the markets are like the tides, they come in and they go out. The sea does not disappear over the horizon in a great hiss of steam into the sunset. Money has to have a home and it is to the markets, at the end of the day, that money’s guardians largely turn. In a post apocalyptical world, bartering will still continue, even if it is with seashells and potatoes. Money is merely the lubricant of trade, whether it be between you and I or corporations or countries.

Believe it or not, the professional market traders relish market falls (or corrections, as they call them) because it presents them with the buying opportunities which are needed to make money. The falls are caused by a mixture of inexperienced emotional investors and market makers (to create the buying opportunities). What is sure now is that markets will move up again and it might be sooner than expected. No person, company or country can stay in lock down for long. We have to eat and carry on our normal lives. Sooner or later, a cure for COVID-19 will be found (they announced yesterday promising results with HIV and Ebola antiviral drugs). The old may be vulnerable, but they don’t need to go out to work, tilling the fields or driving the engines of manufacturing. They are mostly at home enjoying a good rest after a lifetime’s toil. So with a bit of care we may be able to keep them protected until the virus burns itself out.

The lesson is clear: stay invested, or if you are a little brave buy into these low levels to enjoy a potentially better return and maybe average down (don’t commit all your spare investment capital at once but buy into the falling markets in stages to increase the odds of buying near the bottom to increase your potential profits).

Remember, Spectrum does not risk our clients’ hard earned capital. We just know the tide will come in again and as long as we are in sound and sturdy boats (investment funds), it will take everyone back up the beach to new heights. Spectrum chooses fund houses for their experience and expertise, some of whom have been around for more than 200 years. It is their fund managers’ job to react to world events on a daily basis. We use them to protect our clients’ money. We arrange for our clients to access these superb funds through structures called Investment Bonds (or Insurance Wrappers) which are Spanish compliant and which offer unparalleled security (against corporate collapse) and low taxation with both income tax in Spain and the UK and also inheritance tax in Spain.

If you would like to talk to me more about this subject and the points raised, please contact me as per below and I would be happy to discuss this further.

Article by Charles Hutchinson

Charles HutchinsonIf you are based in the Costa del Sol area you can contact Charles at: charles.hutchinson@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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