The last few days have produced the largest falls in stock market values since the 2008 financial crisis.
UK shares have fallen by over 10% from their highs of mid January.
These large falls are due to fears that the outbreak will have a significant, protracted affect on global economic growth.
Whilst some slowdown is inevitable, we believe that market fears are probably overblown. It is not uncommon for stock markets to fall sharply in these situations.
Recent history tells us that stock markets over react to viruses. Markets fell by over 12% during the outbreak of SARS in 2003 and also that of Zika in 2015/16. There are several other examples over the last 40 years. In each case the virus passed and markets recovered.
Thankfully Our diversified approach to investing is helping to support values during these volatile times. The value of bonds within our portfolios has risen significantly in recent weeks, as investors seek a safe haven.
The coming weeks will certainly see more volatility in share prices.
Despite this we recommend that medium to long investors hold their nerve and remain invested. To sell now would only guarantee a capital loss, leaving a very difficult decision about when to reinvest.
Don’t panic. Markets will recover In time and we believe the best strategy for now is to sit tight.