Corona Virus and investment implications

The current volatility around world markets has been well published and I am sure we have all felt moments of uneasiness during this time.  Cashing up your investments may seem like the logical solution, however before making that decision we felt it would be good to show you what happened in past pandemics on world markets.  Looking at the data below we can see that in the majority of cases markets rebounded quite strongly once the epidemic had ended. 

It is important during these times to remember why we invest and to acknowledge that volatility is a trade-off for generating returns above the rate of cash over the longer term. 

It is important to point out that the past does not guarantee how future events will play out and ultimately, the severity of the virus will dictate the market’s reaction.

At the bottom we have also attached a link to a good article by Shane Oliver (Chief Economist and Head of Investment Strategy at AMP Capital). He puts some context around current events. In time like the present, negative news takes centre stage and it compounds in the short term. A good example is our apparent need to have enough toilet paper for 1 year at the present time. Most people when asked why you just bought 80 toilet rolls reply, “because everyone else is”!

As Warren Buffett has repeated for over 50 years  (and I am reading at present a lot of professional investors, fund managers and private equity investors making the same comments) – “Be fearful when others are greedy. Be greedy when others are fearful,”

Why Market Timing Doesn’t Work

Quite often here at Murphy Hill we get some very interesting articles that have been collated by Jim Parker, Vice President of DFA Australia Limited. Today’s is one worth reading in the current climate, with an introduction by Jim.

“Market timing is a strategy where investors quit the market to try to avoid losses before they happen and buy back in at or near the bottom to secure the best gains. This implies that you can have the high returns in stocks without taking on the risk. But at this article explains, that idea is a fantasy”.

10 Key Messages during volatile times

Thoughts from Fidelity investments

Markets are subject to periods of volatility which can undermine confidence. Here are 10 key messages to help you better understand.

Global video update

Magellan video

Below is a short video from one of the International fund managers we use here at Murphy Hill Private Wealth. We have found Magellan as an investment house thinks deeply about markets and the impact this has on clients investments. Even if you don’t have an exposure to Magellan, the article is worth listening to.

In this update, Hamish Douglass (lead portfolio manager for Magellan Global Fund) discusses investment matters and explains why the level of interest rates is so crucial to equity valuations. They also explore the success of Mastercard and the credit-card companies more broadly and we take a look at the challenges facing journalism and what the damage to the newspaper business model means for society.    

Why Magellan is lowering its long-term forecasts for interest rates. And why that matters for stock selection – in particular, the mix between defensive and growth stocks. (Viewing time: 12 min).

Link to video

Estate planning: what your will doesn’t cover

Most of us think of estate planning as simply writing a will. However, ensuring your assets are distributed according to your exact wishes after you pass away can be more complicated than that.

Having an up-to-date will is an essential part of the estate-planning process. Some assets automatically form part of your estate when you die, which means they can be distributed according to the terms of your will. These include individually owned bank accounts, listed securities, managed funds and interests in any property co-owned with someone else.

Navigating redundancy: make it work for you

Image of harbour

Redundancy unfortunately affects increasing numbers of Australians. What if it happens to you later in your working life, and involuntarily? With the right approach and professional advice redundancy could open up opportunities and, ultimately, work in your favour.

Even though redundancies are often part of business, being told your role has become redundant can still leave you feeling blindsided. If it happens towards the end of your career it can really throw plans into disarray if you’d hoped and expected to keep working longer. The key is not to panic.

Some people discover that a redundancy at this stage of life can in fact open doors to new financial and lifestyle possibilities.

Plan ahead for the aged care you want, for your parents

Helping parents make the transition into supported living can be challenging, but forward planning and open communication can help everyone. Here are some things to consider together.

There are good reasons to start discussing aged care options with your parents well before they’re needed. Your parents’ circumstances could change quickly and assistance in or outside the family could be necessary years before you anticipated. The impact on your parents, you and your entire family can be dramatic – both emotionally and financially. Ensuring everyone understands what’s involved is vital.

Weighing up your parents’ options

We tend to equate aged care with residential or nursing home living, but there are other possibilities. You’ll need to discuss what mix of the following options your parents prefer.