Two major disasters have crossed paths and it seems that the only good news about the two is that the coronavirus pandemic has shown us an opportunity to slow down climate change.
Studies show that if faced with a choice between one really long electric shock at a known time and a short one which may or may not come, most people would choose the long, certain one. Get it over and done with. Take the pain and move on. Living with uncertainty is akin to living under a constant threat. As a response, most people desperately search for certainty in the form of cash – unfortunately that reaction may be at precisely the wrong time – very possibly when they should be adding to their portfolios.
Heeding to emotion when investing more often than not leads to the typical buying high, when you think a bull market is going to last forever, and selling low, when you think the world is surely about to end. Right now, our view is that the long-term upside potential in markets is far greater than the possible downside. History tells us that the ‘best’ trading days (or highest stock market returns) usually closely follow the worst. We all know this, but fear often overrides logic as we have an instinctive aversion to loss. Psychologically, the fear of loss is, in fact, deemed to be at least twice as powerful as the exhilaration of an actual gain, as demonstrated by Kahneman and Tversky in 1992.
Fear is an old and strong emotion. It has been handed down to us by our prehistoric ancestors and is hardwired into our brains as a protection mechanism. And the oldest and strongest kind of fear is fear of the unknown. Fear triggers the part of our brain which controls the body’s vital functions, such as heart rate, breathing, body temperature and balance, to take over. So when fear kicks in, our response is fight or flight. At the extreme, it takes five milliseconds to shut down our digestive system, inhibit our peripheral vision and increase the capacity for the heart and lungs to run. To put the five milliseconds in context, blinking takes 300 milliseconds.
This is clearly the extreme, but nevertheless useful to bear in mind when considering how anxiety can lead us to take a knee-jerk reaction when fear about our investments sets in. This is precisely one of the advantages of having portfolios managed professionally. It allows our clients to hand over the day-to-day decision making to our investment team, thereby avoiding these emotions affecting clients’ investments. We have a strict and time-tested investment process in place, which is based on logic, research and analysis. This doesn’t mean some of the decisions we make on your behalf are easy; at the height if the market volatility, for example, things were changing so fast that our investment committee met daily.
It is difficult to predict the short term in normal market conditions. But it is practically impossible to build financial forecasts with a virus as your input variable. Add to this how differently major world powers have reacted to both the virus containment and the economic impact, and you will have seen that the short term is practically impossible to forecast with any degree of certainty. Over the long term, however, one can assume a return to normality, analyse which companies have balance sheets able to withstand this storm, those whose revenue streams will not be impacted by the crisis and those who will be nimble enough to adapt to the changing landscape, as I explained in my article The Opportunity for Investors.
You can also access our quarter-end investment webinars where we will go over the last few months’ news flow, explain what changes we have made to portfolios and share our view as to how events might pan out, and what the impact might be on markets going forward. You can also ask any questions about our investment approach.
So we encourage you to get in touch, whether it is to better understand our positioning and strategy, or to let us know about any changes to your circumstances that we need to understand, in order to include them in your financial plans. We do this with your long-term goals and objectives in mind, which your private banker discussed with you when the investment strategy was agreed on. During these strange times of working from home, your private banker is at the end of a phone line or video link.
We regularly publish articles and insights about trends and events in financial markets. Just submit your email address to receive the updates in your inbox.
Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how we manage money, or call +44 (0)1624 645000 to speak to our client services team.
If you would like to find out more about how we can help clients manage their investments, please contact us on the same number as above, or complete a form using the links towards the end of the page.
Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’
portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.
Rebecca joined Nedbank Private Wealth in May 2004 having moved to the Isle of Man from Barcelona to pursue a course in Business Studies with the Isle of Man Business School. Rebecca was appointed to the role of investment counsellor in March 2019 to focus exclusively on the company’s discretionary investment management services.
She works closely with our teams of private bankers to provide support in advising our clients with integrity, and to give additional technical investment expertise where more complex portfolio requirements exist.
Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
Rebecca joined Nedbank Private Wealth in May 2004 having moved to the Isle of Man from Barcelona to pursue a course in Business Studies with the Isle of Man Business School. Rebecca was appointed to the role of investment counsellor in March 2019 to focus exclusively on the company’s discretionary investment management services.
She works closely with our teams of private bankers to provide support in advising our clients with integrity, and to give additional technical investment expertise where more complex portfolio requirements exist.
Rebecca is a Chartered Fellow of the Chartered Institute for Securities & Investment and a Chartered Wealth Manager.
+44 (0)1624 645813
Nedbank Private Wealth manages mainly multi-asset portfolios, so our communications don’t tend to focus exclusively on one asset class. However, today we propose discussing equities. Why? Because when you consider the news headlines, and then consider equity markets, we appear to be living in a parallel universe.
Read moreThe news feed from the coronavirus is all consuming, and rightly so. A disease that was widely touted, just a couple of months ago, as ‘similar’ to influenza has infected millions and killed hundreds of thousands of people.
Read moreTwo major disasters have crossed paths and it seems that the only good news we read about these days relates to how the coronavirus pandemic is slowing down climate change. Otherwise the press is full of heart-breaking stories of loss, peppered with acts of kindness and a sense of us trying to pull together. No one can tell us with absolute certainty what the future looks like, or when this will end. It can feel like we are staring into the deep unknown.
Read moreOne of the first lessons you are taught when studying anything investment related is the role diversification plays. For my investment exams, I was taught a diversified portfolio consisted of around 20 stocks ‒ a mere nod to today’s view. Instead, your portfolios – if you are a client of Nedbank Private Wealth that is – are invested across thousands of companies.
Read moreAs we witnessed in our latest webinar (click here for the Q&A), investors are struggling to understand everything given the tsunami of news. Markets have begun to claw back losses in some areas, but there may well be more bad news ahead, before we see a sustained trend in positive headlines. So what’s next?
Read more“He allowed himself to be swayed by his conviction that human beings are not born once and for all on the day their mothers give birth to them, but that life obliges them over and over again to give birth to themselves.” ― Gabriel García Márquez, Love in the Time of Cholera
Read moreAs children, most of us were excited to visit a sweet shop – I definitely was. Dazzled by the bright display of shelf upon shelf of glass jars, there were sweets of every possible shape, colour and taste – all covered in sugar. Some coins lay in my hand, but which sweets would I choose?
Read moreToo often we believe clients sit in too much cash. We understand why people do this, but we think that too much can be an issue. How much do you really need?
Read moreWe are one of only a handful of wealth managers who use currency management as part of our investment approach. In this short 45-second video, we explain why.
Read moreInternational Women’s Day was on Sunday 8 March, a day that since 1910 has focused attention on women’s rights. The day – and the invitation to speak on the topic at the Institute of Directors on 6 March – prompted me to think through how much has changed for women in the last 110 years. While there are still challenges ahead, this is pivotal time for women.
Read moreAllie Kirk, private banker, speaks to Rebecca Cretney, one of our investment specialists, about the current market turbulence.
Read moreIf you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.
We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.
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Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you. Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.
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