Door Freddy Forger
You will have noticed that the coronavirus pandemic has caused the financial markets to crash hard. Right now, experts are tripping over each other to explain exactly what is going on and to predict the economic consequences. Panic all around, of course. Except at Stoic, because do you know what we do in times of crisis? We keep our emotions in check and do ab-so-lute-ly nothing. And we have a good reason for that:
At Stoic, we don’t believe in predictions. From day one we take all kinds of scenarios into account, of which this crisis is simply one. That’s why we invest our clients’ assets as broadly as possible in the entire world economy. After all, that is the ultimate diversification of risk: individual prices fluctuate from day to day and can sometimes even crash hard like now, but over the long term the world economy always grows.
That’s why we do ab-so-lute-ly nothing at Stoic.
We always remain Stoic: we keep calm and are here to protect our clients from their own emotions. People, for example, feel that it’s better to ‘step out for now’. Nothing could be further from the truth: time and again research proves that this is ultimately not good for your returns. After all, stepping out often means taking a loss. Getting back in later means that the price increase on which the decision to step in is based has already been missed. In short: a double loss. At Stoic we keep calm by shutting out these kinds of emotions as much as possible. Be patient; it can take a year, or five years, or ten years, but in the end the world economy always grows.
So do we really do absolutely nothing? A small nuance to the fact that we do nothing.
If, for example, the ratio between stocks and bonds in a portfolio grows out of balance due to the large price drop of the equity portion, we will rebalance the portfolio so that the ratio between stocks and bonds stays within the margins of the chosen profile. We see that more as passive control than full-on active 'management'. That’s why we call our way of asset management 'Calm Capital Control'.
