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Investment market mind-set

Covid-19 has delivered health and economic worry like never before… the only certainty is uncertainty!

I’ve had a number of interesting and frank discussions with investors and fund managers, where as nasty (horrific even) as the investment market falls are, the confirmation and acceptance of market losses and realistic expectations of investors have never been so well received and balanced.

I suspect this is partly related to their expectation of results, measured against their ‘proxy investment measurement’ – the main UK index (FTSE 100)… which I’ve explained many times is an indication of equity performance delivery but not a risk managed portfolio.

Pleasingly, many experienced long term investors are taking the view that adding to their investment positions (with a long term view) makes sense – knowing that it may still become worse, long before the outlook for health and the economy improves, leading to investment market uptick.

Predicting investment markets and volatility – and shorter-term outcomes is pointless, dangerous and in many ways irresponsible, as no-one can forecast the outcome of this crisis…

What we know…

We know that stimulus – like never delivered before – across the globe is being thrown at the economy to support it – as it is on its own life support…!

The focus remains – society and the health experts are working to manage the scale of the health crisis, producing counter measures (hopefully) producing a fix to the impact of the virus…

Stimulus

Previous experience of stimulus has delivered support to the economy. The scale now committed is likely over the long term to produce similar results…

If society does as instructed/directed we will get through this… of course with many tragic losses of life, which is so very sad to say.

The economy requires support and action – from society at large and of course government intervention but we will get through this…

Investment decisions

If all investors (long only – funds and stocks/shareholders) behave in the same way that Structured Product investors do – where they invest in ‘by contract’ terms – normally with a minimum investment term of 6 years, it is reasonable to expect that the current crisis will be remembered as a dreadful time – life changing maybe BUT a “value time” for long term investors.  (After all – investing must have a long-term time horizon – as a starting point!)

Attached is a link to a ‘market watch’ article

Market watch: opinion: advice for the coronavirus crash – “you make most of your money in a bear market, you just don’t realise it at the time”
https://www.marketwatch.com/story/advice-for-the-coronavirus-crash-you-make-most-of-your-money-in-a-bear-market-you-just-dont-realize-it-at-the-time-2020-03-18

Valuations

Of course, it is incredibly concerning (especially given the speed of change that the health crisis has progressed – leading to economic disaster concerns) that the leading global indices are trading down 30-35% with specific sectors down 50-60% (some even more!!) at the time of writing.

So, the importance of holding a balanced range of asset classes with quality, best of breed funds, stocks and structures – with a range of barriers, underlying index variants and counterparty exposure is essential and evidenced like no other time, not even the Global Financial Crisis..

For those invested in Structured Products, forget the secondary market at present – focus on the ‘by contract’ terms, which was the reason for the investment being suitable and will be attractive for the long term at present.

The ‘by contract’ terms of a defined return product are based upon the original investment strike point – not where and when the market/underlying index suffers a nasty or extreme bout of volatility.

Many structures can suffer a fall in the underlying index or stock/sector of 35% plus and will ‘by contract’ deliver a 7% pa (plus) simple return.  (Of course – counterparty exposure must be a primary consideration)

So – I say without reservation – for those with new cash waiting to be invested, for the long term, you should consider both Structured Products – based upon a variety of merits, along with a balance risk adjusted (volatility controlled) investment programme, which we have delivered so very well.

Click the link to read our Structured Product page
https://www.bestpricefs.co.uk/structured-products/

Structured Product Newsletter – ISSUE 1

This newsletter remains as relevant today – as it did when it was written…
Take a good read – the issue was contributed to by both David Stevenson – a leading financial writer/commentator and Chris Taylor – The Global Head of Structured Products at Tempo, a leading expert in the sector.

Click the link to re-read the newsletter… or read it on our blog.
https://www.bestpricefs.co.uk/assets/newsletter/structured-products-investor-newsletter-issue-1.pdf

Action

A long-term call for investment money – add to positions, for the long term…
Suspend withdrawals – where at all possible – as unit value is impacted when withdrawals are taken…  So, the simple advice is to avoid withdrawals if at all possible.  The important point to remember when making an investment is the unit price/stock price when you buy and the unit price/stock price when you sell!

For professional, expert independent financial advice at the best price – simply make contact, where we will provide our clients with the best suitability outcomes, for the long term.

Stay safe, stay healthy.

Best Wishes.

Richard and the Best Price FS Team


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