Anything can happen in stock markets and you ought to conduct your affairs so that if the most extraordinary events happen, that you’re still around to play the next day.
As living and working conditions evolve due to the Coronavirus outbreak, we would like to reassure our clients of GAM’s current situation.
Our office is fully operational, and our focus remains as ever on maintaining service levels. In addition to our suite at the World Trade Center, we have a business continuity office located at Ocean Spa Plaza, which fully replicates our systems. Also, we have the ability for all employees to work remotely from home. This may be required for those who need to self-isolate, as well as those at high risk or whose family members are at higher risk. We only ask that clients do not visit our office in person whilst it prohibited to do so.
The business has always been managed prudently with a balance sheet conservatively capitalised at several times the regulatory requirement. With a strong cash balance and no borrowings, our robust financial position allows us to react appropriately. Indeed, we are well-positioned to not only make it through these troubling times but emerge stronger, just as we have through prior market downturns.
Having been established in 1987, we have helped clients navigate a number of difficult times for the markets over the past thirty years and we will be bringing that experience to bear for clients over the coming months. I am sure that you are concerned by the continuing falls we are currently seeing in the markets.
Volatility is always unsettling. However, it is important to remember that the basic principles of long-term investing remain unchanged. Our mantra is ‘time in the market’ rather than ‘timing the market’, and past events have shown us that maintaining perspective is what is important. This is easy advice to follow in times of prosperity, but now is when this advice really matters. Staying the course with a diversified portfolio of investments, positioned for the long-term, is typically the best route to achieving your goals.
Indeed, we believe that this is a temporary shock rather than the onset of a longer-term bear market. It is impossible to call the bottom of the market, but it does feel to us as if so much pain has been inflicted that some sort of market recovery could happen, particularly as talks of a vaccine breakthrough gain credence. In the past, once viruses such as SARS were contained, there was a tendency for economic activity to bounce back quickly, leading to a v-shaped recovery. Targeted fiscal support provided by international governments is providing relief to the economy and banks are more capitalised than ever, enabling them to deploy emergency cash to troubled sectors. All this suggests that the most likely worst-case scenario is a short, sharp recession. In times of such worry, it is important to remain level-headed and optimistic about a resolution.
Markets are now trading at their biggest discount for nearly a decade. Indeed, many company directors are buying shares on this weakness. It should also be noted that history is on the side of investors. Since 1984, there have been five bear markets with the average lasting 385 days and falling by 37%. On all those occasions, the stock market subsequently went on to capture all the lost ground in an average of 684 days.
These are unprecedented times. We wish you and your family good health, and we thank you for your continued support.
