The coronavirus crisis has now had the stock exchanges in its grip for about four weeks. In view of the enormous losses, and because no end is yet in sight, many investors understandably ask themselves:
Wouldn't it be better to get out now after all?
Even though we know how much this runs counter to intuition and the urge to become active, we never tire of stressing that this is not a good idea. In doing so, you cement the losses incurred so far and lose the chance of making them up again through the countermovements that will set in sooner or later. And countermovements will come, because the coronavirus crisis, too, like other crises before it, will be overcome.
The widespread notion of "getting back in once the markets have calmed down" is an illusion, because it implies that you can get in on time, before prices recover significantly again. But there is no one who can announce the right moment to get in. On the contrary: the most violent upward movements often occur precisely when the news is at its worst. That's why the same holds as ever: the best strategy is to see this crisis through and stick to the equity allocation you carefully chose for good reason.
To underline our position, we would like to give you one further, somewhat more fundamental aspect to consider: the only situation in which we, too, would advise you to liquidate your investment would be if the market economy system itself were called into question. But in our conviction, there can be no talk of that.
Since the system of free markets is not on the brink, there is ultimately no better investment strategy than to be invested worldwide and broadly diversified — that is, where prosperity arises: in the productive capital of the world's companies. This holds true in times of crisis with severe price losses too, however painful these may be. Companies want to generate profits and will, if necessary, adapt to profound changes in their environment in order to be productive again in the future too.
We trust in the power of the global economy.
