The title of this newsletter may seem a little unusual considering the situation we all find ourselves in. A situation thrust upon us so swiftly and unexpectedly. The speed of change can be distressing, let alone the result. I will come back to my choice of title later, after a few comments about the markets.
From a technical charting perspective the markets are very oversold, indicators are as low as they were during the GFC. However indicators are just that, indicators, price is the ultimate indicator and it could go lower. Uncertainty creates fear, and fear creates caution, then panic. The human need for safety and security come to the fore of peoples minds, so they sell.
Indicators on the chart above look remarkably similar to the GFC low.
My portfolio, except for a few small holdings has been stopped out. I have had many emails and some phone calls from people asking me what to do. My answer was stick to your plan. If your plan was to sell at a certain point, then that is what you should do. That is of course if you choose to stick to your plan. I appreciate it is a very difficult thing to accept that the situation is not as we would like.
As a full time trader/investor capital preservation is paramount. If you are in a position to ride this out then that may be a different matter. Bear in mind during the GFC the markets fell around 60%, so far they are down around 30%.
There could be a bounce up. I am surprised it has not happened yet. Probability suggests the bounce will come soon, but we are in very unusual and uncertain times. A true “Black Swan” event. Until black swans were discovered in Western Australia, Europeans no doubt thought they couldn’t possibly exist. What was the probability of a black swan existing on the other side of the world? When many of us were waiting for the next financial hiccup to crash the markets, it turned out to be a virus. A few may be saying "I told you so" but I think the majority were taken by surprise.
So, what now. Well in times of crisis it's good to have a plan. I had mine and it has been executed, time will tell if it turns out to be a good one. Now, as to the newsletter title. Recently I watched the movie Collateral Beauty. It's about a man (actor Will Smith) suffering from the death of his daughter to an unlikely and rare disease. During his darkest hour an elderly lady (actress Helen Mirren) encourages him to see the collateral beauty of life.
In other words, be grateful. This is a time to count our blessings, be generous, appreciate what we have, not what we have lost. With many people going into social "lockdown" it can't be all a bad thing. Take the time to reconnect with family and loved ones (even if it is by just using technology), support each other, and even do what one of my mates did recently, give some toilet paper to the elderly couple across the road, who were beside themselves with worry.
I have a calendar at home with Zen sayings on it, today I turned it over and it read
"Surrender to the grief, despair, fear, loneliness, or whatever form the suffering takes. Witness it without labeling it mentally. Then see how the miracle of surrender transmutes deep suffering into deep peace."
The saying "Let it go" may be a cliche, but it works.
Please feel free to contact me if you wish to discuss your options during this difficult time.