Six Park's Investment Advisory Committee reviewed asset allocations and market conditions at its regular meeting recently. The committee was united in its view that current conditions do not warrant any change to Six Park’s asset allocations.
While some commentators are suggesting that we are now in “uncharted territory” in financial markets, the reality is that destabilising events are part of the investing cycle. In these times, it's critical to have a rational, well-informed approach to making investment decisions, and Six Park is fortunate to have a highly experienced team at the helm.
During the IAC meeting, Six Park co-founder and investment committee chair Brian Watson AO reflected on the nature of market cycles and his experience during downturns:
Having been in the markets for many years, including New York during the October 1987 crash when markets fell 23% in one day, it always felt like uncharted territory - each ‘crash’ occurrence has typically had novel elements and thus can feel scary. But the process of shocked markets falling and then recovering does in fact repeat itself, and the data clearly supports that it is prudent for medium and long-term investors to stay the course during these events.
This sentiment was echoed by fellow committee members Lindsay Tanner and Mark Nicholson.
The investment committee will be looking for a variety of indicators in the data from countries such as China that have experienced coronavirus early for signs that their economies are stabilising. They anticipate that the current volatility will continue while the duration and full impact of the coronavirus on global economies becomes clearer.
However, it’s worth noting that volatility can mean swings both up and down: for example, last Tuesday the ASX200 had its best one-day gain since 1997 after a record drop on Monday, while the previous week it moved from -8% to +4% in a single day.
In the meantime, the investment committee’s guidance remains the same: unless absolutely necessary, avoid succumbing to the emotional urge to exit the markets, as time in the market typically beats timing the market. You can read about this in previous articles about the benefits of staying invested, what to do when markets fall and top tips for surviving a bear market.
We will continue to keep you updated with our investment committee’s views and guidance in the weeks and months ahead.