The last two weeks have been brutal for investors, with major indices descending into bear market territory with a sense of aggression reminiscent of when the 2008 sub-prime crisis began.

After having a ‘Wile E Coyote moment’ (an analogy borrowed from Damien Klassen's piece below), markets went from pausing at record highs mid-February into freefall as the novel coronavirus (covid-19) forced central banks to make emergency rate cuts and pump liquidity; governments to shut schools, shops and even borders, and a Black Swan in the form of a grenade by Saudi Arabia and Russia into the oil market.

No doubt investors are worried about the health of their portfolio and require sage wisdom on how to handle the crisis. With so much noise and unfiltered doomsday commentary abound, Livewire has sought out insights from its highly experienced contributors and well-known investing stalwarts – some who have lived through it all – to provide a guiding hand through these challenging times.

1. The increasing economic threat from coronavirus - what to watch for and what should investors do

Shane Oliver , AMP Capital

Shane reminds investors that periodic sharp falls in share markets are healthy and normal. With the long-term trend ultimately remaining up and providing higher returns than other more stable assets. For investors to sell now after a major fall would just lock in a loss.

"When shares fall, they are cheaper and offer higher long-term return prospects. So, the key is to look for opportunities the pullback provides. It’s impossible to time the bottom but one way to do it is to average in over time."

2. Equity investors - don't lose sight of what you actually own

Stephen Arnold , Aoris Investment Management

For those reviewing their holdings with a view to potentially selling amid the panic, this wire from Stephen teaches equity investors that they are ultimately part owners of a business. The value of what you own is a function of its income into perpetuity and as long as you don’t lose sight of this you will make better decisions and keep your head while others lose theirs.

"If you own businesses that have proven to be highly profitable each year through the economic cycle, are conservatively financed and sensibly managed, you can be confident that the value of the business hasn’t changed materially in the last month. Where prices have declined, it makes this value more attractive. This is the essence of sensible investing."

3. Buffett: Trouble is always coming, buy stocks anyway

Warren Buffett, Berkshire Hathaway

Echoing that sentiment is the iconic investor Warren Buffett, a man who’s invested through World War 2, many financial crises and stock market crashes, and the outbreaks of SARS, Ebola and much more. As he puts it “trouble is always coming”, so buy stocks anyway.

"If you buy a business, you’re going to own it for 10 or 20 or 30 years. And the real question is has the 10-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours? I do think that not only our businesses but American business generally will be doing fabulously better 30 years from now or 20 years from now."

4. How stock markets perform after heavy falls

Schroders Australia 

For proof in the pudding that stocks eventually bounce back strongly over time, Schroders has put together a great table showing the U.S. stock market’s ten worst days and their rebounds over 1-year and 5-year periods, and looked at the Australian example too.

"Using the US stock market as an example, the past three decades show the strongest five-year rebound in the US brought a return of 164%. That is an annualised return of 21% in the five years after a 6.7% fall for the S&P on 20 November 2008."

5. How big would the bounce be?

Marcus Padley , Marcus Today

Tying in nicely with above – for those seeking opportunities – Marcus has tentatively put a list together of stocks that he liked before the sell-off that he would like to buy again for the eventual recovery.

"In the GFC the bank sector fell 56%, and including dividends, recovered its high in less than three years, went up 115% in just over a year and blew through the all-time high in five years … on the basis that we are going to forget COVID-19 within a year and the market drop is going to turn into a “Pop”, we are going to see this opportunity again, not just in banks, but in many stocks and the market."

6. Buy Hold Sell: 5 market darlings at a discount

Livewire Exclusive 

With ASX small caps being hit the hardest among market falls, we focussed our latest Buy Hold Sell episode on five specific small caps that were on a tear until covid-19 well and truly infected markets. 3 of them (EML Payments, City Chic and WISR) featured in the fundies' #1 stock picks for 2020; 1 (Nanosonics) was nominated as a quality to stock buy at a cheaper price, and the last (Breville Group) is a company that both of our featured guests have a common view on.

Tune into this week's episode (you can access the video, transcript or podcast) featuring Chris Stott of 1851 Capital (making his inaugural media appearance after departing Wilson Asset Management in 2018) and Tim Serjeant of Eley Griffiths  to see what they think of these companies.

7. A Wile E Coyote moment for Aussie House Prices

Damien Klassen, Nucleus Wealth

To finish on a more sanguine note, Damien had rightly called the recent fall in the share market. His attention now turns to housing and it isn’t good news. “Australian housing is contending with its own Wile E Coyote moment,” he says, drawing parallels to how equity prices were frozen-in-time in mid-February while a disconnect between investors’ views of the coronavirus and the reality of the now-pandemic was brewing.

"Our regulators, governments and central bank have wasted most of the good policy options in a desperate attempt to hold and already expensive house market at high levels. Now we have a genuine external shock, most of the remaining policy options are bad ones."

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