A lot has happened since my last note just a week ago. Markets are down significantly, and the world is adjusting to the realities of what this pandemic means. Regardless of this our strategy remains the same. We hold our portfolio investments for the long term with a focus dividends and portfolio income. We are not concerned with short term fluctuations, regardless of their size. This will come and go and in 12 months or so the world will be back to business as usual.
With regards to the coronavirus disease, it appears that the countries that have best managed the situation have moved early with regards to lock downs and social distancing measures. The early numbers show that these measures are very effective at slowing the spread of the virus. Those countries that are slow to implement these measures quickly find their hospitals and healthcare system under siege and are forced into more severe lock down measures in the end anyway.
Therefore, I now believe that lock downs and social distancing are going to be an essential tool in the fight to slow the spread and help our healthcare system cope. We are seeing more and more events being cancelled and I think it’s probable that we start to see this at scale in the coming weeks. The exponential growth in the number of cases from here means these measures are going to be critical and the earlier they are implemented the faster the overall turn around will be.
I remain convinced that the Federal Govt will go as far as necessary to manage the impact of this on the economy. The recently announced $18 billion stimulus package is a good start. But I believe there will be more announced in the coming weeks as required to support people, business, the economy, and more importantly in the short term, the health system. I also expect this to be the case from governments around the world.
With regards to investment markets, we are starting to get into attractive buying territory. We are seeing the share prices of very good companies fall to unreasonably low levels. That’s not to say these prices won’t go lower, given the current level of uncertainty, they probably will. But if you’ve got a long term view the coming weeks will provide opportunities that don’t come along very often.