The Week the World Waged War on COVID-19
Central banks and governments announced emergency measures this week, but it was not enough to calm fears as we saw one of the largest one-day declines in the markets on Monday since the 1987 market crash. Policy makers have started to put into effect measures to mitigate the spread of COVID-19 and in the meantime support the economy, businesses, and individuals. This may be one of the greatest calls to action outside of wartime.
Please see below where you will find the following audio commentaries and updates.
Audio Commentary from Jim Allworth, RBC Dominion Securities Investment Strategist
- Jim’s thoughts on the economic impact of the outbreak and what this disruption means for financial markets, what we’re observing during these fast-moving developments, and what to expect from here
Global Insight Weekly
- Emergency care – Details regarding the aggressive actions taken by governments regarding monetary and fiscal stimulus – to combat the insidious attack of the coronavirus.
Words of wisdom from Warren Buffett
Audio commentary: Coronavirus developments and market impact
RBC Wealth Management’s latest thoughts on the unfolding coronavirus outbreak and the investment implications.
As the COVID-19 situation continually evolves, this is a period of great uncertainty for all of us.
To help make sense of these difficult times, we had a conversation with Jim Allworth, RBC Dominion Securities’ Investment Strategist, on the economic impact of the outbreak and what this disruption means for financial markets, what we’re observing during these fast-moving developments, and what to expect from here.
Please take a few moments to listen to this audio file.
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Wise words from Warren Buffett
by Matt Carthy
On October 16, 2008, in the midst of the global financial crisis, Warren Buffett penned an op-ed in the New York Times titled – “Buy American. I am.” At the time, U.S. equity markets were down roughly 30% amidst widespread market fear and investors were in dire need of inspiration. Sound familiar?
Yesterday, in search of some inspiration of my own, I read Buffett’s article and realized the bulk of what he wrote 12-years ago still applies directly to investors today. With that in mind, I wanted to share a few of my favourite nuggets from the Oracle of Omaha:
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On fear. Fear is now widespread, gripping even seasoned investors. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10, and 20 years from now.
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On where things are headed. I haven’t the faintest idea as to whether stocks will be higher or lower a month, or a year, from now. What is likely however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.
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On investor behaviour. In the 20th century… the Dow rose from 66 to 11,497. You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
How did things work out for Mr. Buffett?
Over the short-term, things didn’t go so well. From the day Buffett announced his intentions to the American public, his purchases would get pummeled. In fact, the S&P 500 would go on to drop another +20% before bottoming. That said, this didn’t cause Buffett to flinch as he knew he couldn’t predict short-term market movements.
For many, Buffett’s advice provided the framework required to see across the valley during the worst storm to hit markets since the Great Depression. And, by putting money to work when others were fearful, investors who followed his wisdom are certainly singing his praises today.
Source: RBC GAM, Bloomberg, Morningstar. Buffett's cumulative return is S&P 500 TR CAD from October 16, 2008 to March 16, 2020.
This is what “buy low, sell high” looks like
While we are often quick to simplify the key to investment success with the popular adage buy low, sell high – what these words look like in practice is often overlooked. Buying low doesn’t mean investing at the bottom. If it did, we’d all be in trouble. Even the best investor of our generation couldn’t get that right.
Rather, in practice, it often plays out as follows. You buy and the market goes down. Then you buy some more and it may go down even further. However, as a long-term investor, your time horizon is sufficient enough that one day, down the road, you’re in position to sell high.
"Investing money is the process of committing resources in a strategic way to accomplish a specific objective.”
~Alan Gotthardt~