With a sense of awkwardness, I walked out to the end of my driveway just before 6.00am on Saturday morning, Anzac Day 2020, to show respect to the ‘ANZACs’. As we know, the official dawn services were cancelled because of the Covid-19 virus restrictions.   

There were a few, but not many, neighbours in our street that also appeared at the end of their respective driveways. The few candles that were being held, twinkled to show their holders’ presence and the symbolism. Dawn was unfolding and there was a reverend silence in the unseasonably warm Autumn air. It was all quite surreal yet peaceful.   

Like most people doing this particular ‘first-time’ type of Anzac commemorative exercise, I was uncertain as just what you do. Maybe just a few minutes of reflective silence of acknowledgment and appreciation for the extreme sacrifices borne by those back in 1915, as well as over the subsequent years of war over the century of years’ ago; then I just go back inside my home maybe?  

But, then, from somewhere up the street, the Australian national anthem music (no words) could be gently heard as it broke the street’s silence. This was immediately followed by the New Zealand national anthem music (again, no words). All was quite stirring as the early morning sunlight crept up from the horizon.   

A voice could then be heard reciting the traditional Anzac Day Ode, “They shall grow not old, as we that are left grow old: Age shall not weary them, nor the years condemn; at the going down of sun, and in the morning, we shall remember them. Lest we forget”.   

A recording of the haunting ‘Last Post’ ensued and, only a moment after that, the ferries in Sydney Harbour could be heard bellowing out a long-lasting blast of their horns. Those few minutes in all were so powerful; it sent a shiver down your spine and put a lump in your throat. Gradually then, we quietly went back inside to our own houses but, no doubt, all of us there, and the many others around the nation, were both reflective and uplifted by the sequence of those commemorative events we just heard.   

Maybe we should well remember that, especially in these testing of times, we still do live in the ‘Lucky Country’. And that description about Australia well extends to the state of play here, and in New Zealand, surrounding the current Covid-19 virus situation.  

Whilst walking just over a week ago, I ran into (metaphorically speaking of course in these social-distancing times), a doctor friend of mine who specialises in the respiratory field; very pertinent with this Covid-19 situation.  I knew he has been heavily involved in the coordination of Covid-19 preparedness for many weeks’ at one of the major hospitals on the North Shore. The enormous mission for him and the team was to be ready for the very probable excess influx of people from the spread of this very contagious virus. Scores of hospital beds, protective clothing, masks, ventilators, quarantined areas, procedures and staffing were all aspects of this challenge of readiness. Supplies of these critical items were certainly not at their fingertips! He said that it was a scramble given the global demands on these such supplies, and the suddenness of the sheer scale of this pandemic.  

My doctor friend said that they were simply hoping that the enforced containment measures rapidly put in place by the government here, would ‘buy them time’ to be as ready as best possible for what had been expected as the deluge of cases of the virus sick people needing critical attention. The death prediction numbers for Australia caused by the imported virus were to be in the many hundreds at least. He said it was expected around the middle of April for the predicted peak of serious Covid-19 cases. There were grave concerns at the start of April amongst him and his fellow medical practitioners, that hospitals here would be just unable to handle the anticipated many serious virus cases. The infected people from cruise ship debacles’ and the ‘March Aspen skiers’ returning, only added to this grim prediction and concern.  

However, and to all our great fortune, my doctor friend simply said to me, and to quote him, it has been “simply a miracle” that Australia’s case numbers from Covid-19 have been so few, including the mortality rate,  in the actual numbers and in relative terms when compared with virtually any other country.   

Australia’s containment measures, including closing the borders, daily update information and reinforcement messages, the unprecedented Government and RBA stimulatory actions and packages, as well as a solid community response to what was asked to be done, such as social distancing and measured isolation , have all worked exceedingly well to date as we relievedly know.   

The many weeks’ of containment restraints to fight off the health threat appear to have worked. This will now allow for the restraints to be gradually (and carefully) lifted. We know that we are certainly not ‘out of the woods’ yet, meaning the threat of the virus spreading, does still exist. However, we are all better equipped and educated to the combatting of the virus so, with vigilance and care, we hope there are even bluer skies ahead in this regard.  

In early March, we wrote that if the Covid-19 virus could be contained and controlled, and eventually eliminated to at least a non-life-threatening degree, then world economies should start to return to more normalised activity again over time. This should still happen as things stand, but nations impacted by the virus are at different stages in this cycle. The longer the lockdown, the longer it would take to go through the recovery phase.   

The level of global economic stimulus generated over the past month or so to reduce the economic fallout resulting from the virus pandemic, has been ‘shock and awe’ like in both its size and the speed delivered; greater than that done during the GFC over a decade ago.  Has all this stopped the financial market concerns and stemmed the sapped confidence of people around the globe? This is the next big test but, with time, and with more normality to be returned around the globe, it does appear to look more positive in its totality. Yes, there will always be the, “ah, but what if…”, we know. Yet, we also know, that uncertainty is a fact of life. The belief of perseverance paying off in the long run must outweigh this false cause for letting uncertainty rule our actions now and for the future. The past couple of months’ have been an enormous challenge for all of us. Still, we have faced it, and it has tested our resilience. To date, we have done what we needed to do. It has also exposed some ‘unknown’ frailties in how we do things.   

Strangely though, in a perverse way, Covid-19 and the ‘lockdowns’ have been events which have given us (and will continue to give us) the opportunity to re-assess and re-adjust how we as Australians (being the nation as a whole including, hospitals and medical services; schools; businesses, small and large; families and individuals, etc.) do things. This ‘time-out’ has given us opportunities that we normally would not have had to reflect, reignite, replenish and rejuvenate. It is an opportunity to refocus on what we are doing and the how and the why. Otherwise, if this event had not occurred, it may have been just us all doing the same old, same old, without being able to stop (albeit done under duress!), and to reconsider many things. And, maybe, good reforms will grow from this all. We can but hope.  

Turning our discussion now to investments, and a couple of important basic principles that I feel need to be reinforced during these volatile times we all are experiencing. Two common misconceptions (and which the media often accentuate) is how many investors view their investment portfolios. One aspect or principle is what a portfolio valuation actually means to an investor and, the other one is what the actual income received side of investments means.   

The principle of valuation can be misunderstood or misused. A common case in point: a client recently phoned me to discuss some general investment matters. She also made a comment that it was great to see her superannuation portfolio ‘recover’ somewhat from the low point of the week before during the dramatic sell-off because of the Covid-19 virus fears. True, but she then said that this portfolio was still ‘down’ some 20%+ from the market highs of mid-February. Again, true. However, this observation by her is a common trap or distraction. Some people (and all media) keep comparing valuations to the ‘high point’, such as “investors have lost billions since the highs of last month…!” is a common heading we see or hear on the media obsession channel whenever they can broadcast it. But, really, why make such a comparison especially if you did not buy at that high point?   

The only two valuation times i.e. price times that do really matter are when you actually bought – how much you paid for them – and when you actually sold (or will sell, if you do so) – and how much you sold them for. All those other price moves, those daily valuations, those up prices, those down prices, do not really matter, do they? Why worry about a valuation when you are not selling? Investors should buy quality assets to build income producing portfolios and real growth over time.  

A valuation at any point of time is where buyers are ready to buy, and sellers are ready to, or need to sell. In weaker markets, prices retreat from where they were, as buyers pull back and seek cheaper prices which they anticipate. Conversely, in stronger markets, prices advance from where they were, as sellers pull back and seek higher prices which they anticipate. Simple Demand and Supply actions in motion reflected by the prevailing market force prices.   

If you are not buying or not selling (those being the only two important points in time!), then the ‘other’ valuations do not really matter other than maybe a point of interest, or maybe to get a sense of how all is progressing. Think of this statement in terms of house prices too! We all like valuations of assets we own to go up but why ‘panic’ if prices come down unless you do have to sell. Makes sense? I believe so and hope so, especially when buying quality investment portfolios.  

A second investment principle I think that needs to be remembered, as it can be overlooked especially in times of volatility, is the income side we earn on an ongoing basis from our investment portfolios. Measuring a portfolio’s one price in time against another price in time must also be considered in the context of what that investment mix has actually delivered to investors in dollar returns e.g. dividends, rent, interest during the period. This is described as total returns not the just one valuation point versus another one. Media often fail to report the total return of investments, just focusing on valuations and not mentioning income returns, which are often very important and substantial, especially with equities. If you are not intending to sell your investments, then the income streams received reminder is very important, as it is a major reason behind why we do and should invest!   

Always keep sight of what you have set out to do over time! And do not be distracted by the noises of confusion, misinformation and short-termism. These are traps to being successful investors.