This past month we saw one of the bloodiest and fastest market collapses since 2008.

And we still need to brace for whatever the coming weeks will bring, luckily there have been some retraction but that might be short lived in extremely volatile market. The corona virus (covid 19) is still spreading all over the globe, and although it looks like China and South Korea have reached their peak, the rest of the world in for n rough ride.

Part of the plan to contain, includes area lock downs, and limiting or even cancelling all forms of travel between certain areas and countries, we being witnessed to having our own country lockdown now.
Globally this triggered a whole host of uncertainties over the economic impact of global growth and a possible global recession. The uncertainty sent markets into panic and caused the type of sell-off we saw to date. Obviously, speculators will take more drastic measures than long-term investors.

There is a famous saying;
There are known knowns; there are things we know we know.
We also know there are known unknowns, that is to say we know there are some things we do not know.
But there are also unknown unknowns, there are things we do not know we don’t know.

And the Corona outbreak and the eventual impact this will have is a very good example of this. Once the fear and panic eases, there will be opportunities for long term investors to get into the market at reduced prices. But still being very cautious.

The US financial markets have been trading at very expensive and records levels, and a correction was bound to happen with or without a global virus. The rest of the global economy, South Africa included had a very poor to lacklustre performance over the past 5 years. As a small player in the global economy South Africa will always follow global markets lower, and that is on top of the fact that we have major economic and growth concerns of our own.

So, the big question is what should you as an investor do during these turbulent and unknown times. Well what you shouldn’t do is buy or sell anything if that reaction is based on fear and panic, or a presumed opportunity. There will be good opportunities, but one needs to remember that a good company before the Covid-19 and the same company now with a greatly reduced share price might not be so good anymore. The entire local and world economic outlook has changed dramatically since the outbreak.

Nothing good comes from decisions based on fear and uncertainty.

Once there is some clarity and more information, you should review your position and even consider some opportunities.
Contact us, should you need some guidance.

Jacques Hodsdon –  MCom Tax | CA(SA) | CFP ®   is a Director of SPI WEALTH. For enquiries contact, jacques@ spiw.co.za or 013 752 6566