Potential 2nd Wave or Dip With Stock Markets During Coronavirus

Published / Last Updated on 21/05/2020

Many are concerned about a second wave of coronavirus infections as lock down is relaxed.

This may then create a 2nd wave of stock market falls as the virus grips so far untouched countries around the globe, businesses in developed nations that have already suffered may close, may struggle for profit, may stop paying dividends and indeed a 2nd wave of lock downs could trigger an even bigger recession than what is currently being forecast, which makes grim reading anyway.

What should investors do?

We suggest that nobody can call the market.  This is therefore a gamble.

  • It is a gamble if you leave money in safe haven cash deposits as interest rates are virtually at zero and could go negative.
  • It is a gamble that markets could fall even further but equally they could rise if progress is made on treatments and vaccines.  You cannot call the market, you cannot time your investment exactly.

We suggest you divide monies into short term (money needed in the next 5 years), medium term (money for 5-10 years) and long term money e.g. pensions (monies that you may not need for 10 years +).

Certainly, many people, depending upon their tolerance to losses, may wish to take some risk with medium and longer term investments.  You should set your own limits on what you can afford to ride out losses as markets may bounce up and down for a while yet but sooner or later they will recover.

If you are prepared to take risk, do it as an ‘educated or informed’ long term gamble, do not look at markets everyday, look at markets and fund values when you see headlines that a vaccine is working, that people are back to work, that we can fully integrate again.

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