My generation has never seen times like these. Countless companies have ordered staff to work from home, and people have been warned against non-essential travel. Some people are still panic-buying, despite assurances that with normal shopping habits, the supply chains and supermarket stocks will be largely unaffected. The FTSE 100 has continued to spiral downwards.
But sadly, throughout the world, people have been affected by even more dire consequences.
Being an investor in these times is difficult. It is hard trying to second guess how decisions governments around the world make will affect your holdings. It is even harder still when the market is plunging as other investors sell-off their stocks.
I think it pays to be patient and to remember that investing in the FTSE 100 is a long-term project. Although we are living in unprecedented times, the stock market has had big wobbles before and recovered from them.
As a long-term investor, I enjoy looking back over historical events. It is good to gauge how businesses have responded to major disruption before.
Comparisons keep being made between the coronavirus outbreak and World War 2.
I believe it is helpful to think about how businesses have prospered over the time since. Even in the last 30 years, businesses have moved on drastically, with technology and globalisation propelling corporations into $1trn entities. And in the last 30 years, despite the recent major drop, the FTSE 100 has grown by 140%.
Investors hate uncertainty, and at the moment no one can accurately quantify how the coronavirus outbreak will affect the economy. Certainly some degree of harm will be caused, but how much? Should we stop buying FTSE 100 stock?
I remain hopeful that over time, British businesses will prosper.
I am investing for the long term. I do not want to make a quick buck from the coronavirus outbreak. Instead, what I buy today, I want to hold for the next 30 or 40 years.
In these times, identifying wonderful stocks remains challenging. What the government does next could seriously harm some industries. People’s health remains the most important thing, and investors need to take note of this.
Before the coronavirus outbreak unfolded, I had identified International Consolidated Airlines Group — the owner of British Airways — as a FTSE 100 stock to watch. However, with travel restrictions in place for many countries, only the extremely brave investor should now consider buying this. I will certainly be avoiding IAG shares.
In terms of UK stocks, in today’s market there is only one thing I would buy and hold for the next several decades: a FTSE 100 index fund.
Why buy FTSE 100 stocks?
I think that it remains too much of a risk for me to pick individual stocks. As the situation develops, it may become clearer which industries will thrive and where it might be more beneficial to an investor to identify individual stocks. For now, I think the safest option is to buy the whole market.
By buying a tracker fund at regular intervals, I hope to ride out any serious market fluctuations by pound-cost-averaging.
I have faith that in the long-term, British businesses will succeed.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…
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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.