How to manage panic & uncertainty from market volatility

This week we are addressing the topic of Panic. We spoke about this topic in our latest video that you can find on our website here.

There has been a lot of focus about the coronavirus and the impact it, and other factors such as the oil trade war, are having on the financial markets.

The reality is that volatility will remain in the markets for the next few weeks or even months. Market movements will be driven by many factors, some rational and some less so: data in relation to economic and business performance; changes in trade balances; governments’ monetary policy; exchange rates; the spread and control of the coronavirus; governments’ health policies; investor sentiment; investment opportunists; and market momentum both in relation to fear and opportunity.

So, where do we go from here? In an environment where there is likely to be continued market volatility, there are some parallels between information and advice in relation to finance and health. Whilst there are many sources of information regarding coronavirus, some better qualified than others, we are being advised to take our information from informed and qualified professionals and formal government and medical institutions. It’s the same with your finances, get your advice from informed professionals. In both circumstances, it is wise to avoid the hype and more sensationalist headline-grabbing articles online. Focus your attention on those that really know what they are speaking about, get your advice from qualified professionals and experts in their field, that have your best interests at heart.

The second parallel between health and financial advice in the advice we are being given at this time is to be prudent and take sensible precautions. You don’t necessarily have to take drastic action and indeed taking dramatic actions after an event is often not the best course of action. However, assessing and taking sensible cautious measures is good advice.

More about panic

In times of heightened uncertainty when we are feeling vulnerable or at risk, it is a natural response to be more concerned and to move towards panic. It’s normal and ok to panic. In fact, it can be quite good for us in some circumstances, because the heightened awareness from panicking can keep us safe and alert us to risks. What is important though is to get yourself some space between your normal panic reaction and any subsequent actions you might think to take in response to the trigger. This is where it is important to take time, distil the information, understand your response, get professional advice and take thought out and measured responses. This helps control panic.

At this point in time, you can ask yourself a key question: what are your goals? And are your goals still fundamentally in alignment with your investments, and with your portfolio? If the answer is yes, then you may not have to take any action, drastic or otherwise, at all. If the answer is no, then you need to review both your goals and your investments and bring them back to alignment. When your goals and your investments are in alignment, panic and worry tend to subside.

If you are concerned by the financial markets, by the impact on your investments or are unsure if you are aligned, or you just want to get some clarity, feel free to contact us, we will be happy to speak with you. You can reach us by email at info@blackswancapital.eu