The coronavirus pandemic has undeniably affected our everyday lives in many ways and has also hit the global economy and financial markets hard. In a chaotic market environment with extreme daily moves, many investors wonder whether they should liquidate their portfolios as they are flooded by negative sentiment and bad news. Although it is difficult to remain calm under these circumstances, we should always remember that this is not the first time we are witnessing a market crisis and history has shown us that in most cases, rushed decisions may lead to long-term sustainable losses.
To get a better understanding on this, we will examine the case of a hypothetical investor that started an investment policy in late 2019 having a long-term horizon i.e. more than ten years. The policy involved an initial lump sum investment in a diversified global equity fund.
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