Just a couple of weeks ago, the consensus about COVID-19 was that it would have minimal impact on healthy adults, who could generally continue going about their business. This week, however, one country after another has started urging businesses to temporarily close and allow employees to work from home if possible.

This new virus has indeed had a significant global impact, and concerns are growing by the minute. Practically all aspects of our lives are already affected by this pandemic. Investors are rattled and equity markets are reeling from the COVID scare all over the world. People who have a range of investments are now asking: “Is this pandemic going to negatively affect our investments? What does wealth management mean in this time of fear and uncertainty?”

The good news is that financial experts and wealth management professionals like the Global Asset Management company in South Korea can help you protect your investments in difficult times like the one we currently find ourselves in. Among other things, the company helps people manage retirement funds, contingency funds, savings and income, and investments.

The impact of COVID-19 on the financial management industry may not be as much of a priority as ensuring the public’s health and well-being, but it is still important for investors to be guided accordingly. You’d naturally want to know that your investments are safe even in these trying times. These are probably the top concerns in your mind right now as an investor:

1. What will the impact on the global economy be?
   It is understandable that you would be concerned about how profound the pandemic’s global economic impact will be, considering the fact that the number of cases continues to rise across the globe.
2. Will it have a negative impact on Asia’s economic growth?
   Investors in the Asian markets would naturally wonder how the region’s economic growth will be affected, as that may also make a difference on how your investments will fare. To date, China has not resumed full production capacity, and this could raise the whole Asian region’s downside risk to growth.
3. Will there be more monetary easing from Asian central banks?
   When the US and China were embroiled in a trade row in 2019, central banks in Asia actively rolled out policy easing, and it is only logical for you to wonder if they are going to do the same in this time of crisis.

Whatever the answers are to the above questions, it may be worth your while to consider the following:

Goals-based Planning

Economic shocks like the one caused by COVID-19 typically showcase how powerful goals-based planning can be. Having a goals-based plan can effectively protect your investments from short-term economic shocks, as it limits the impact of any short-term economic shock on your investments.

Short-term Asset Allocation

You may want to consider moving your assets to less risky short-term investments. You could avoid downside risk by investing in things like bonds and 10-year notes, and the timing is perfect right now for you to do this. When the pandemic is finally contained and the market bounces back, you could then capitalise on market gains by going back to investing in equities.

Long-term Investments

Perhaps the best thing about long-term investments is that they are generally safe from short-term economic reactions to such tragedies as the recent COVID-19 pandemic. Just like other economic downturns that have happened in the past, the fears caused by the pandemic are expected to gradually die down in the coming months. With proper guidance from a reliable asset management expert, you could benefit from a measured long-term investment approach even amidst the most trying of global challenges.

When you make the choice of availing of the services of a global asset management company, you get the benefit of having someone to guide you all the way, even if you have the misfortune of being directly impacted by the coronavirus or any other tragedy. Having someone to talk to about your assets and how best to manage them during difficult times can make a huge difference in the results you see with regard to your investments.

Financial advisors are there to help you become more confident in your financial stability and effectively navigate through uncertain periods such as the one the world is going through right now. They can help you avoid making financial mistakes as a result of instinctive reactions that may just lead to lifetime regrets. Additionally, these experts can keep you up-to-date with the latest market trends and help you decide which strategies to include in your portfolio.

So far, COVID-19 has affected global financial markets in ways that are similar to the effects of other economic downturns that have occurred throughout human history. However, the world is yet to find out what the full impacts of this pandemic are going to be. To this day, we are still unsure as to whether the virus has peaked in terms of diagnosed cases or not, but as long as you receive proper guidance from wealth management professionals, you can be sure your assets will be safe despite the outbreak.

The widely accepted assessment of the current situation is that it’s a Black Swan event. By definition, Black Swans are rare, unpredictable and extremely chaotic. They arrive by surprise, create a major impact, and are explainable in hindsight. Statistically speaking, they are outliers. This makes them impossible to predict, even using advance computer models and metadata.

Black Swan investment theory is attributed to Nassim Nicholas Taleb, a historian and former options trader. The expression actually dates back to 16^th century London, as a metaphor for impossibility. Europeans assumed swans were all white. Since that’s all they had ever seen, they considered the existence of black swans to be impossible. In 1697, Dutch explorers travelling in Australia saw black swans for the first time, and were shocked. Since then, the term has been a metaphor for the concept that something previously considered to be impossible could in fact occur. The term Black Swan has been used to describe World War One, the creation of the Internet, the fall of the Soviet Union and the terrorist attacks of September 11, 2001.

Others say that the correct metaphor for the current crisis is a Gray Rhino. Linguists use this term to refer to highly probably but overlooked threats that cause a massive impact. U.S. author and policy analyst Michelle Wucker coined the term. She introduced the concept at Davos after the Greek financial crisis in 2012. In contrast to a Black Swan, a Gray Rhino is a “highly probable, high impact yet neglected threat…grey rhinos are not random surprises, but occur after a series of warnings and visible evidence”.

Wucker considers the current crisis predictable, since the likelihood of global pandemics is known. Scientists certainly know that high impact outbreaks are highly probable. Now that this one has occurred, she argues that we should have known it would. But this goes back to the third aspect of a Black Swan event: explainable in hindsight. Whether this is a Black Swan or a Grey Rhino is immaterial. There is chaos in the market, and Global Asset Management investors need to make objective decisions of how best to handle their decision making.

When the stock market drops sharply, investors get distressed. People have been lulled into complacency by the incredible bull run over the last few years. The current crisis is challenging. Not only is it impossible to predict what is unpredictable, but people are concerned about their health as well as their financial security. Panicking also makes people more vulnerable to a scam. Certain things, however, are within our control:

1. Establish a formal investment plan with a Global Asset Management advisor for objectivity
2. Ensure adequate diversification in your investment portfolio to lower risk
3. Identify opportunities within the chaos to turn a black swan white

As the great Warren Buffett said, ‘Be greedy when others are fearful and fearful when others are greedy.’ Fear and greed drive stock markets. It’s important to remember that panicking is the best way to lose money. Losses are only on paper unless you sell and realize them. Looking at things from another angle, every transaction involves a seller and a buyer. The fact that the market hasn’t dropped to zero means people are buying stock right now. Who is buying? The Pros. For example, when Delta Air Lines crashed at the end of February, none other than Buffett himself was buying. Berkshire Hathaway picked up just shy of a million shares at $45-$47, down from $62 less than a month earlier. Buffett knows how to turn a black swan white.

What Will This Correction Look Like?

This is the question. GAM advisors know timing markets is a fool’s game. It’s impossible to predict the length or depth of a stock market drop with any certainty. One thing we know is that market corrections are normal, and they always reverse themselves. The bellwether S&P 500 has, on average since 1950, had a 5% decline 3x per year, 10% pullback every 16 months, and 20% correction every seven years. It’s normal.

Stock markets dislike uncertainty. But we’ve seen Black Swans before, and what we do know is they pass. Over the long term, the stock market goes up. One of the worst stock market crises was the September 11^th terror attacks. In anticipation of major panic, they shut down the NYSE and the Nasdaq for the longest period since 1933. When the markets finally opened, the NYSE experience its largest drop in history. The S&P was off 11.6% and the Dow Jones Industrial Average dropped over 14%. And yet. One month later, the stock market had regained all of those losses. Several sectors were even up – defense, communications and pharmaceutical stocks.

The Global Asset Management team in Seoul, Korea remains optimistic about the future. We invite anyone interested in finding shelter in this storm, and even profiting in these markets, to give us a call.

https://www.global-asset-mgmt.com/contact-us/