What Now For Investors?
After almost four weeks in quarantine, it’s not unusual to start reflecting on a lot of things. Given the uncertain situation we find ourselves in globally and what may unfold as we all slowly transition back onto the runway.21 April 2020
After almost four weeks in quarantine, it’s not unusual to start reflecting on a lot of things. Given the uncertain situation we find ourselves in globally and what may unfold as we all slowly transition back onto the runway, I thought I’d share some of my thoughts over recent weeks to give some perspective on what investors may well be thinking.
With the world economy suffering a severe downturn of business – probably worse than 2008 crisis and unmatched by anything in history aside from the Great Depression – it’s natural to want to run and hide in a closet and preserve all the cash you can.
With 20 years of everyday, boots on the ground experience and countless transactions under my belt, the most common question I have been asked in my position as an estate agent, property investor and now part of a real estate private equity team is, “When is the right time to buy and invest?”.
There is a famous saying: “The best time to plant a tree was 20 years ago, the second-best time is today”.
For me personally, I have stuck by this mantra over the years and it has always served me well. Having been through economic slowdown in 2001, the crash in 2008 and the ensuing crisis, I have experienced first-hand what it feels like when the market goes down and then stays subdued. In those times, only the investors that stay active and believe deep down in their gut that the world is not going to end will gain better pricing. Even when media sensationalism portrays doom and gloom rhetoric, saying, “This is unprecedented” or “It will get much worse before it ever gets better”, it’s the investors who have the foresight and believe the markets will rally again that do well.
You really don’t need to be an expert in the macro and micro of things to see that the general trend of the past 50 years has been positive: living standards across the board have generally improved and we are all in a much better place; technology has provided countless advances such as more people with access to clean water, more people being educated, fewer deaths from conflict… And in my opinion this trend within a better, more globalised society will continue.
Calling tops and bottoms of markets is a tricky game that only a few can accurately play. Certainly, I can’t. Given we never truly have all the information, it’s always a best guess rather than a certainty.
So your appetite for risk is ultimately the key driver for making any investment decision. You also know that you do not want to chase Alice into Wonderland based on confusion and mixed messages. In my opinion your view on fundamentals is the best gauge on the what, where, when, how and with whom to invest, and sometimes not making a decision is worse than making a decision. Boom and bust cycles exist and there is little we can do to prevent them. It is a systematic force of nature and rather than fight it we should aim to work with it.
Overall I believe that the UK is still one of the most robust economies in the world along and with one of the best property markets. This allows me to stay positive and focused on my next acquisition. I will be frank and admit my preference is to invest now, but I am always analysing the market in different locations to determine what, where, when, how and with whom to make my next investment.