How to keep cool in current markets
SPONSORED CONTENT - Mark Whitehead, Portfolio Manager, Securities Trust of Scotland, on the importance of calm during turbulent times
It is difficult to write an investment article during this period which is unlike any that I can remember during my career.
The impact of the virus is undoubtedly globally significant and it’s unusual to have a supply and demand shock at the same time.
Investors will be looking at falls in value of their portfolios and will be wondering what to do. Quite often, this can lead to panic and knee-jerk decisions being made than can be harmful over the long term.
It is often said that private investors invest at market peaks and sell when markets fall. This can crystallise losses and missing large bounce-backs that happen at the start of a recovery.
As a professional investor, it’s clear that markets have significantly repriced from record highs.
However, it is worth considering this event in an historic context against other prominent market falls and the overall upward trajectory of share prices in the last thirty years. For example, there was the Asian Financial Crisis from which markets bounced back quickly, The Tech bubble and The Global Financial crisis.
The current situation is serious and painful, and it can be hard to look beyond today. But I do believe markets will recover and the multi-decade themes driving growth identified before the C-19 outbreak, like demographic change, resource scarcity and, technological change remain intact.
No company is immune from current events but some are better placed to recover quickly. In previous articles, I have outlined our clear focus on identifying quality businesses with strong balance sheets, pricing power, high returns and sustainable business models. This helps them to withstand short-term downward pressure, while accessing the economic benefits of longer-term growth themes.
Inevitably, short-term investors will focus on the earnings downgrades and results but for long-term investors with a focus on quality companies, this may be a unique opportunity to buy more of the companies that will be long-term success stories at favourable entry points.
As long-term, research-driven stockpickers, this is how we use our investment edge. And we remain true to our quality focus and longer-term perspective.
Past performance is not a guide to future returns. Capital at risk.
Information correct at time of publication. This information is issued and approved by Martin Currie Investment Management Limited. The opinions contained in this article are those of the named manager. They may not necessarily represent the views of other Martin Currie managers, strategies or funds. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
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