It’s just a few short months since the Australian share market was hitting record highs. Rain had brought relief to drought-parched farms. The catastrophic bushfires were under control. Optimism was in the air.

Now, of course, everything has changed. Financial markets are experiencing high volatility, and entire countries are in lockdown to slow the spread of coronavirus. People are concerned about what the future might hold.

What happens next? The truth is, nobody knows.

But we can get an idea of how things might play out by looking at the past.

Financial shocks

We’ve endured a lot over the last century, from global war to the Great Depression, and more recently, a string of financial crises. Every time there’s been a major shock, share markets have fallen (at times by as much as 50 percent).

In the wake of those disasters, communities have gradually been rebuilt, and eventually, financial markets have recovered as well.

What’s different this time? Actually, a few things…

We’ve tackled global pandemics before, but we’ve never seen one bring so much economic activity to a grinding halt so quickly. Share markets have suffered some of the biggest one-day falls in history.

Despite the huge gains in health science over the last century, we don’t have the answer to COVID-19 – yet.

But peer through the doom and gloom, and there are reasons to be optimistic about the future.

Business as (nearly) usual

Look beyond the headlines of travel bans, isolation and empty restaurants, and there’s a lot happening. Businesses are still running – providing critical health services, producing the food we need, keeping us safe. Mines are still operating to provide the raw materials we need for future prosperity. 

We might have changed how we work for a while (like being plugged into the internet at home, rather than in an office) but most of the goods we require, and the services we need are still being provided.

That doesn’t mean everything is rosy. A lot of businesses, large and small, won’t make it through this crisis. But many will, and post-COVID-19, should thrive again. 

What about my super?

For a decade, super funds have generally been delivering great returns.

Not surprisingly with the current market volatility, balances have now taken a hit. Diversified funds, and those with a modest approach to shares, have been cushioned from the impact, but other asset classes which are often regarded as safer, such bonds and property, aren’t immune from the current crisis.

It’s hard to take the long-term view when the world around us is changing on a daily basis. But what we do know is this: humans are resilient and innovative. We’ve overcome immense obstacles in the past, and will do so again in the future.

The best medical knowledge suggests we can control this virus. In time, the panic afflicting financial markets will fade, and optimism will return. And that’s something else we can learn from history; when optimism returns, financial markets can recover more quickly than you can imagine. 

Check out our latest market update from our CIO, Graeme Miller, or if you’d like to talk about your super give us a call on 1300 033 166.