Coronavirus and the Market

10th March 2020

Superannuation is an investment of capital that you will never spend – you will spend the INCOME and CAPITAL GAINS it generates over your life times. You cannot get any longer term that this.

120 Years of Market history shows all the major corrections from the Great Depression, the 1987 crash, the tech crash of 2000, 911, the GFC – all followed by MANY years of strong gains. Long term money like Superannuation has always been a Net Positive Return and always will be.

Who in their right mind Sells off quality assets that deliver an average Dividend Yield of 6% pa when Interest Rates are 0.5% pa ?

It’s certainly not rational and intelligent investors with their Self-Managed Super Funds!

It’s certainly not advisory firms like ours trying to time an unpredictable market due to an unforeseen pandemic!

Wait for it – it’s Machine Driven Trading using Algorithm Momentum – it’s the only possible way to generate enough volume to drag the market down.

That’s right, give your Superannuation to a Fund Manager who outsources the investing to a “machine” and you suffer the idiocy of them selling your quality investments at the wrong time.

What doesn’t fluctuate with Share Prices – the INCOME, your Dividends will continue to get paid regardless of what share prices are doing.

Our best advice is to do the following in the short term:

  1. Ignore share prices for the time being;
  2. Continue spending from your cash flow like you always have (the dividends);
  3. Deploy any surplus cash into the same quality assets at much cheaper prices (you will look back in a year’s time marvel at the gains)

That’s it. If you are concerned your investments will be reduced to rubble, consider this, the following existing industries will need to cease to exist:

  • All banks and financial services
  • All supermarkets
  • All healthcare
  • All insurance providers
  • All IT companies
  • All mining
  • All energy

Whilst the Coronavirus is dangerous and deadly, I don’t see all of these industries being bankrupted as a result of it.