The global Coronavirus spread has been both rapid and devastating. As the situation has deteriorated and nation states have taken unprecedented action, investment conditions have deteriorated rapidly. The global lockdown on businesses and citizens is already putting a considerable strain on many industries and stockmarkets have been quick to reflect the deteriorating environment. In order for a stockmarket to function correctly, this involves market participants accurately measuring risk and providing liquidity. As investment bank teams disband, working from home, we have seen evidence that activity has bordered on disorderly with even the most liquid names struggling to trade in size. Sectors traditionally viewed as defensive have not been immune to what has proved to be a widespread sell off. At times like this we recognise that it is important not to panic and make kneejerk decisions that are likely to be detrimental to our clients’ long-term financial health.
At difficult times, such as those we are currently experiencing, paralysis is not an option. Even if portfolio activity drops, our own activity does not. Over recent days, our team of investment managers have been looking closely at every investment within our portfolios and analysing how it has been, or could be, affected. Each asset class and financial instrument used to take exposure is feeling different pressures through this period. We are in regular contact with research desks and fund management teams to interrogate them and discuss how they are repositioning (if at all) in the current environment. The recent sell-off has been indiscriminate and, therefore, there are many potential opportunities to be considered now, at significantly lower valuations than previous. Our clients can be confident of our continuing attention. Many of the Cave’s team have worked through a number of similar market events over the years and have the requisite knowledge and experience to provide guidance and reassurance. Whilst news flow over the next few weeks is likely to remain pretty grim, there will come a time (although difficult to imagine currently) when the dire headlines have faded and the world starts to look bright again, where those who felt anxious now but didn’t panic will feel thankful.
Should you have any questions or wish to discuss matters further, then please do not hesitate to contact us on 01604 621421. - John Naylor Chartered FCSI Chief Investment Officer