We are now 2 days into the extended lock-down and what a crazy time it has been so far…
While these are very uncertain and without a doubt, very exceptional times and we have no idea when we will come out of them, we remain convinced that the best thing to do with your investments is nothing. Remember that investing is long term and requires time to work. Because of this, there will always be times when we experience incredible volatility and what feels like the end of the world as we know it. History has shown that the best strategy during these periods is not to panic. It is incredibly easy to get out of the market, however, it’s not so easy to get back in again and you will usually end up going in at a higher level than at which you got out, thus locking in your losses.
As I have been thinking about this, I think that investing can best be compared to planting a tree – there is a lot of initial preparation as you find the right spot and dig a big hole, but once it is in the spot you want it to be, apart from the initial watering and occasional pruning, there is nothing to do but wait for it to grow, and that takes a long time. We have quite a few beautiful trees at home, some of which are more than 25 years old – they have weathered many storms and while they may have lost a few branches over the years, they are still standing strong and growing. The point is this, once we planted them, we left them alone to grow – some years they grow more than others, but it’s only many years later that you can look back and see the growth.
