The headlines are screaming “Black Monday“. The oil price has slumped to $45, and we’ve had a FTSE 100 crash of 8.8%. What a way to start the week.
I was only just pondering what to do if the Footsie falls below 6,000 points, and it’s already happened. Early Monday morning, London’s top index dropped as low as 5,891.56 points.
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The reason is understandable, in the wake of the weekend’s coronavirus developments. UK cases are starting to climb, and pretty much the whole of northern Italy is now on lockdown. Some UK supermarkets have even started rationing hand wipes, and I’ve seen photos of shelves having been emptied of dried pasta.
Is there really any need for such short-term worry? Well, over the coronavirus, yes there clearly is a need for concern — but not panic. Follow recommended procedures, perhaps keep away from crowds as far as possible, and keep washing those hands. But beyond that, the way I look at it is there’s nothing further I can do. The virus will take its course, and some time in the not-too-distant future, it will be finished.
Once the virus is in the past, there are a few things I am confident of. One is that the FTSE 100 crash will reverse.
Another is that the State Pension won’t have got any better, and we’ll all still need to save and invest for our futures. And all of the great companies in the FTSE 100 will still be there making profits and paying dividends to shareholders.
Now, it might seem a little mercenary to be thinking of money and profits at a time like this. But for me, investing in shares isn’t about greed, or making a quick killing. No, it’s about providing for my family over the long term — because there’s nobody else who’s going to do it. So where does that leave me now?
Well, the final thing that I’m absolutely convinced of is that it’s time for a long-term vision. That’s the way we should always view our investments. But our mettle is being tested right now, more than at any time I can remember.
Selling shares during the panic will surely prove to be a poor strategy. It’s always been a poor strategy. This time’s no different.
Many investors were selling out at the depths of the banking crisis. But since the worst of that slump around the start of 2009, the FTSE 100 has just about doubled in value. That’s even after the latest coronavirus collapse. Oh, and investors have also been pocketing growing dividend yields, reaching well above 4% per year.
People right now are worried about where the value of their pension investments is going to be in a week’s time. A month. A few months. Which shares are going to fall further in the coming weeks, and which could you sell today to avoid further losses?
I simply don’t have the answers to those questions. Nobody does. But where will the FTSE 100 be in 10 years’ time? With a high level of confidence, I can tell you I expect it to be way higher than it is today. I’m putting my money on it.