Equity and credit markets have declined with unusual velocity. Investors hate uncertainty and they are currently facing 3 major unknows:

1) A Health crisis with no visibility on the length and extent of the pandemic;
2) Unprecedented economic damage: it is impossible to estimate what will be the short and long-term impacts of the global lock-down;
3) Financial contagion: Dysfunctional markets and wild swings suggest a liquidity crunch and forced sellers. This is all happening in an environment of high leverage and over-regulated banks.

The longer the pandemic lasts, the greater the risk that the sharp economic downturn morphs into a full-blown financial crisis with all bubbles bursting.

What should investors do?

While it is never easy to navigate through a crash, we have learned that this is a good time to be long-term, active investors. Ultimately, the economy and financial markets will be able to go through this crisis as they have in the past.

However, picking the bottom of the market is impossible. We thus advise investors to buy risk assets but only gradually and not in an indiscriminate basis. This is an environment where only the fittest will survive and then thrive.

We hope you will enjoy this issue.

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