Wash your hands. Ignore the markets. Don’t touch your face. And don’t touch your investments.

That is hard advice to follow. With the coronavirus epidemic intensifying, the markets have entered a period of extraordinary volatility.

It feels like 2008 out there. COVID-19, the disease caused by the coronavirus, is affecting thousands of people around the world and infecting what might end up being millions. Businesses are starting to struggle and with quarantines and travel bans are coming into place, companies are slashing earnings estimates and economists are slashing growth forecasts. The markets reflect that.

The best advice is not to sell stocks and buy bonds. It is not to move into cash and gold, or to think about alternatives such as cryptocurrencies. Investing on a longer time horizon means not worrying about buying dips and selling highs. And studies demonstrate that buying and holding assets for the long term is a great strategy.
We feel reasonably confident that the worst economic effects will be transitory (weeks, months or possibly quarters but not years).

Bond markets are now signalling that cash rates will be more or less zero indefinitely and that interest rate support for the economy is at its limit.

At Dentons Wealth we believe that this is not the moment to be making panicky sales from what are long term investments and as uncomfortable as it seems in the short term, be reassured that markets invariably recover from shocks such as these.

If you'd like to discuss your individiual portfolio, please contact your Dentons Wealth adviser.

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