The Corona Virus: What does it really mean to your portfolios??

You would have to have been living under a rock for the past few weeks to not have heard of the corona virus, otherwise known as the Wuhan Virus, emanating out of the Wuhan province in China. It has caused mass panic in China and prompted the countries authorities to place all affected areas into lock down. Despite their best efforts the virus has managed to make its way to Europe, the USA, and even to us here in Australia.

What you have also likely heard is that this outbreak is going to absolutely decimate world markets. Phrases like “ASX to drop 1pc in global sell-off”, “ASX set to follow Wall Street lower as Corona Virus panic grips markets” or “Corona Virus fear grips world markets”. There is no doubt that fear has well and truly taken hold of world markets. However, as investors we need to sit back and take stock of what is really going on, what long term impact will this have on your portfolio, if any?

To know the answer to that question with any degree of certainty would require a crystal ball  and a level of sorcery that I simply don’t possess, so I guess I’ll just leave the wild predictions to the “experts” who get paid enormous sums of money to come up with such pearls of wisdom as:

·         “Sell everything” - Royal Bank of Scotland (RBS) advised clients in January of 2016 in response to a small correction of global markets

·         “Pension funds and 401k’s (US retirement accounts) set for worst fall in recorded history” – US mainstream media outlets In response to Donald Trump winning US election in November 2016

·         After the Sudden Acute Respiratory Syndrome (SARS) outbreak in 2003 investors were panicking about airline stocks, and tourism businesses. It was, apparently, going to herald a new age of telecommuting and the end of face-to-face meetings.

The truth is anyone who took the advice of the RBS in 2016 paid an enormous opportunity cost of lost potential gains from not staying invested in the market. The truth Is the election of Donald Trump had the opposite effect to what “experts” predicted, and SARS in 2003 – You guessed it…. The “experts” were wrong again.

The truth is that in 2003 during the SARS outbreak the S&P 500 (main US market index) dropped 8.3% and stocks related to discretionary spending and emerging markets (particularly China) under performed. At the same time, the price of gold jumped 4.8%. The good news is that over the next six months after the scare, the S&P 500 more than made up for its losses, gaining 18.6%.

More recently, the Middle East Respiratory Syndrome (MERS) corona virus spooked investors starting in late 2012. Between November and December 2012, the S&P 500 dropped 0.8% while the price of gold increased 0.5%. Notably though however, the S&P 500 bounced back from the scare much more quickly, gaining 15.1% over the next six months. 

Importantly Bank of America healthcare analyst Yang Huang believes that the impact of this recently outbreak of Corona virus could be less severe compared with the severe acute respiratory syndrome (SARS) outbreak in 2003, as the Wuhan virus appears to be less contagious and less fatal. Tom Essaye, founder of Sevens Report Research, notes “From a market standpoint, since this disease is closely related to SARS, I think the market reaction to the SARS outbreak gives us a good template to follow,”

In simple terms then what is that “template” and how do we follow it? A fair question as by now some of you might be thinking “Yeah, but this time might be different”. It might also have been different after:

·         It might have been different after the GFC.

·         Or the dot.com crash.

·         It might have been different after Brexit.

·         It might have been different after Trump.

·         Or December 2018, when stocks fell meaningfully just before Christmas.

And yet here we go again. There will be people lining up, this morning, to sell once the market opens, influenced by fear the headlines and the talking heads. “At least I did something” they’ll tell themselves. Not like those suckers who held on while their portfolios fell, and…

And?

As I pointed out earlier, I possess no crystal ball, nor a time machine. I can’t tell you what happens next, in either the short term or the long term. I’d be lying to you if I said I did. But there has been no time in history — EVER — when developed world stock markets have failed to scale their previous highs and go on to set new ones. There has been no time when adding money to the market, regularly, has been a bad idea (indeed, continuing to add during the depths of the GFC turned out to be incredibly lucrative).

I don’t know how the ASX will close today. I cannot say whether tomorrow will be better or worse. Your portfolio might be 2% lower — or higher — in a month’s time. What I do know is that history is, very strongly — on the side of the patient, long-term, dollar-cost-averaging investor. Markets tend to move violently on the back of 2 emotions: fear and greed. Warren Buffet, perhaps the world’s most famous investor has a theory on this and it is simple “be fearful when everyone else is being greedy and be greedy when everyone else is being fearful”.  

Sure you could try and react to the daily headlines. Sell. Buy. Buy. Sell. Attempt to time the market for short term gain. Try to be smarter than the other guy. Just remember how that’s turned out… literally every other time.

Written by Glenn Barea

Reference: Yahoo Finance, Motley Fool.     

Are you a slave to your business?

Your business is there to serve you; not the other way around. In other words; you should never be a slave to your business.

Being a slave implies a victim mentality - that the world has simply dealt you a bad hand, that you have no say in the matter. Perhaps you hear yourself thinking you’re a slave to your business because your clients need you, or your team can’t cope without you, or maybe the economy is busting, or booming… basically, insert any excuse here as to why you can’t change. But it is exactly that, an excuse.

The OARBED behaviour model tells us we must act above the line; that we must stay out of BED, and take Ownership, Accountability and Responsibility for our actions – and choices. So, what’s stopping you from taking control of your business? What must you do to be a victor?

• Do you need to start going home on time every night?

• Do you need to stop accepting work from people who don’t respect your payment terms?

• Do you need to block out calendar time to respect your health and wellbeing?

• Do you need to implement 10 strategies to grow your cashflow?

• Do you need to train and empower your team to do more?

• Do you need more time to plan?

No more excuses - it’s your business, you make the rules, choose not to be a slave!

Need accountability coaching? We can help you be the master of your business.

"Success isn’t a result of spontaneous combustion. You must set yourself on fire." - Arnold Glasgow

Happy Customers, Happy Bottom Line

“Loyalty is when people are willing to turn down a better product or price to continue doing business with you”.

That’s a great quote from Simon Sinek. Write it on a post-it or somewhere visible to remind yourself through your journey.

If customers are unhappy, they’ll leave you for one of your competitors. If they’ve had a poor experience or been treated badly, some will go as far as making a scene on social media or leave a bad business review to warn others. The last thing any business needs after a blow to the wallet is a bruised ego.

Customer satisfaction is important to any business, but the earlier you are in the growth of your business, the more critical it is to ensure that your early customers are highly satisfied. When you sign up your first customer, that person represents 100 percent of your customer-base, so their opinion of your business, along with the next handful of customers matters greatly.

Think about your early customers and who these people are. If they’re still known to you, you should be proud that they had faith and were one of your earliest customers who backed you.

Here's a few ideas:

• Everyone likes to be told they are valued. Start by saying thanks to your loyal customers and be genuine about it.

• You could do something to recognise their loyalty – perhaps a gift, discount or a special offer just for them.

• If they’re still using your product or services, you could ask them to be a referral customer and/or to be featured in a published customer case study.

Building a Better Business in 10 Steps

You’re in business, congratulations, that takes courage and commitment.

It’s not easy, and at times you might find yourself questioning why you’re even doing it, but you’re here because you had a vision. You decided being in business was a better way to achieve that vision than working for someone else. And, you’re right; you just have to work on it. Good things come to people who hustle.

You’re likely an expert in what you do… maybe you’re a mechanic and know the inside of a car engine like the back of your hand. Or, maybe you’re a fashion retailer who can style anyone. This doesn’t mean you’re an expert at running your business though. It’s hard taking time out of working in your business to work on it. But doing this is essential for its success.

There’s no magical overnight solution to building a more successful business. It’s about taking small steps every day to get a bit better than the day before.

So, what should you do to build yourself a more successful business? We’ve broken it down into 10 essential steps:

1. Get clear on exactly what it is that you want.

2. Be open to change and new learning.

3. Define where you are now (warts and all).

4. Make a plan.

5. Get your organisational structure right.

6. Be a better leader.

7. Be held accountable by someone independent.

8. Build strong networks.

9. Monitor your progress.

10. Keep your well of happiness full.

These are the 10 most important things you should be working on to ensure you achieve your goals. Small, incremental changes can have a massive effect on your success.

We’re here to help you, every step along the way. Get in touch!

“Success isn’t overnight. It’s when every day you get a little better than the day before. It all adds up.” - Dwayne ‘The Rock’ Johnson