Concern or Opportunity

In these times of uncertainty and financial market volatility access to good information and communication are both so important.

Like much of Europe we moved to remote working and social distancing last week and we are working remotely. We have actually extended our hours of operation though as we continue to help our clients and be available for the international community via telephone and video calls.

We are also running a series of webinars for expats in Europe so look out these in your country. There is a link on our website, they are free so please register.

There are two main types of questions we have received over this week. These are:

1) What is happening in the market and is my investment ok?

And

2) The markets have fallen, and it feels like a good time to invest. Should I do that now?

These are essentially questions about how your view risk and whether you see the market through the lens of fear or opportunity. There is no right or wrong. Each position is valid.

We need to be clear here on risk though.  We consider risk as being a scale of volatility from low to high, but that this volatility or risk moves about a long term trend line that over time gradually goes up. In this scenario, at times like now, your investment may be worth less than a month ago but it still has a value and it is expected that value will return and grow over time. This explanation is different from uncertainty which some people call risk, but by which they mean variability without limits. This definition leads to the concern that they may lose everything and their investments will be worth zero. There are some investments that do have that risk, but they are not investments that we would recommend.

Back to the two most frequent questions this week.

First question: if you are in diversified investments and your timeframe is longer term and your portfolio is still aligned to your goals then you are probably ok. What we know from our experience is that markets do fall periodically and at sometimes much further than others, and that they do inevitably recover.

Our answer to the second question of whether it is a good time to invest is “it depends”. If you have a sufficiently long-time frame, and if the potential investment is aligned to what you are wanting to achieve, then yes it could be a good time to invest. But it needs to be right for your circumstances.

We need to be clear here and say we don’t know with certainty what is going to happen tomorrow. What we do know is what has happened in situations like this in the past and how financial markets and instruments respond to events. We can apply our 20 years’ experience in other market downturns and the resource almost 100 years of market data.

If you have questions about your investments and finances, whether from a position of concern or opportunity, or if you would just like a second opinion, please contact us at info@blackswancapital.eu and go to our website for more information and to get the link to register for our free webinars on managing your finances in this volatile period.