Turbulence on the stock market
Volatility on the stock market has been historically high in the wake of the continued spread of the corona virus and the negative effects that this is likely to have on the global economy. Furthermore, friction between oil producing countries has sent oil prices tumbling, adding to the negative sentiment. Falling stock prices also affects our investors and its never nice to see the portfolios shrink. Although the downturn has been unusually steep, history has often shown that the long-term investor wins in the long run.
What action has been taken?
Like most companies in our industry, we have introduced guidelines for preventive purposes with regards to the virus and have taken steps to ensure that our staff is doing well and can work from home if needed.
Concerning the markets, it is difficult to predict how long the turbulence will last and how big the consequences for the economy will be. The stock market turbulence during the SARS epidemic 2002-2003, which did not spread as effectively as the COVID-19 virus, went on for 3-4 months. With regards to the funds, we prioritise a long-term investment horizon, which, during market turbulence such as this, offers the opportunity to find bargains among quality companies in the market. Companies operating in certain sectors and industries, such as within digitalisation, can be tomorrow’s winners.
What can you do as an individual investor?
Although the stock market is showing us its worst side right now, we emphasize the long-term view, which is one of the cornerstones of Fondita's investment philosophy. For investors with a long-term investment horizon, the best guideline is usually to keep calm. We follow our investment philosophy where we prefer companies with strong long-term drivers and a proven business model.