Keep calm and carry on

My (non)-reaction to COVID-19 and the stock market turbulence.


image from pixabay.

 

Catastrophe!

I usually avoid the news, but you’d have to be living under a rock to have not heard of the coronavirus, aka COVID-19. I’m keeping vaguely informed about it’s progression in the UK and worldwide, but I’m not interested in minute-by-minute updates, so I’m usually behind the times. There’s no escaping social media, however; my twitter feed was getting progressively more and more crazy with news about the impacts that the virus was having on the stock market on Friday.

It’s impact became more apparent when I did my monthly check up on my stocks and shares ISA over the weekend. My rather pleasing 20% growth had dropped to less than 10%!

I did some more research – two weeks ago, at it’s peak, the Vanguard FTSE Global  All-Cap fund was priced at £141.95 per unit. When I last checked, that had dropped to £127.89. A drop of £14, or 10%.

 

What to do?

Obviously I did what every other blogger is preaching right now. I did… nothing. Absolutely nothing.

I’m a relatively new investor, so I don’t have much experience with market drops. To get all Game of Thrones for a second, I am definitely a summer child; only aware of the good times, whilst others remember the darker times and keep telling us that winter is coming! During the last major-ish drop in December 2018, I remember feeling anxious about losing money, but decided to just leave it. With hindsight, that was the correct thing to do, as the market then rebounded throughout Q1 2019 and soared ever higher.

During this latest crash, I find myself feeling fairly sanguine about the situation, even though I have more invested than I did a year ago, and have “lost” more money. Of course, that money isn’t actually lost unless I choose to sell, and I have no intention of using any of the money I have invested for 10-20 years.

I’m lucky enough that I’m only a few years into my investing experience. My ISA only holds around £35K. This means that, as of the last time I checked, I’ve actually only lost about £2000. Peanuts compared to some other bloggers posting 5-6 figure losses! And easy enough to recover with about 4-5 months of savings.

 

What next?

Alas, I have no idea what happens next! It wouldn’t surprise me to see stocks drop some more, but it also wouldn’t surprise me to see a rebound at some point in the next few weeks or months.

Of course, I imagine that my attitude to stock market dives will change as I accumulate more money and the swings become more wild. Regardless, this has been a useful experience to gauge my risk tolerance and my reaction to a falling market.

 

The bigger picture

I’ve only focused on the financial impact of COVID-19. Of course, real people in the world are dying as a result of this outbreak, and I feel sorry for those that are affected. Furthermore, I expect this to get worse before it gets better. However, I’m hopeful that the UK will be able to cope. So far we only have around 50 confirmed cases. Fingers crossed that the NHS is able to help those who need it most if (when??) the outbreak becomes much more widespread.

 

Over to you

How about you, dear reader? Are you an active investor, shorting stocks and planning to make a lot of money? Or are you just along for the ride and continuing to invest passively? I’m interested to hear how others are reacting to this. In the meantime, I hope you and yours remain healthy throughout.

3 Responses

  1. Yes mate. I plan to borrow money and start shorting Tesla. According to my calculations I’ll make 10K in 1.2 seconds, so million, I am coming for you! Haha 🙂

    Last year over the same period my Forex trading account was at -120K. Since then these stock market corrections don’t affect me at all. In fact, they make me happy (yes, I am as contrarian as that).

    My S&S ISA is set to be defensive, so the only thing I have done so far is rebalancing during last weekend. I am also cashing out from P2P, so it’s being ideal with the current situation as i buy as soon as I get any cash on my bank account.

    These market corrections are little compared with the long term stock market returns. No reason to worry if we invest for the long term. The situation changes for those who were invested 100% in stocks with plans of retiring this year, then I would panic indeed!

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