"I have not looked at any of my holdings and don’t intend to. I don’t want to be tempted to jump because I think I’d be more likely to jump in the wrong direction than the right one. My advice has always been to choose a sensible diversified portfolio and stop reading the financial pages. I recommend the sports section."

Quotation attributed to Richard Thaler, professor of behavioral science and economics, University of Chicago Graduate School of Business.[1]

These are difficult times – nobody knows how and when markets will stabilise. We appreciate the emotions they arouse. But you should take some comfort that our planning process is not driven by what is happening in the market at any point in time. It focuses on achieving your long term financial objectives, based on reasonable projections of long term investment returns.

However, to give you the best chance of receiving those long term returns requires discipline to stick to an agreed strategy both when markets are performing well and when they are performing poorly. Admittedly, when markets are under the severe pressures we are currently experiencing it is human nature to want to take flight and forego the discipline.

But experience suggests that it is times like these that distinguish the successful long term investor from the fair weather, "buy high-sell low" speculators, who start out with best intentions but succumb to their emotions when the going gets tough. Now while we don’t know for sure that what worked in the past will work in the future, unless you think this is the end for the capitalist growth engine we are pretty confident that it will.

Below we discuss five aspects of our approach that we think are worth bearing in mind to help you to fight the inevitable emotions:

1. Your risk exposure is personalised for you and your circumstances

We have devoted a lot of time and effort together in modelling your life situation and objectives to determine a long term risk exposure (i.e. your target asset allocation) appropriate for you and your circumstances. This exposure has been chosen taking into account your tolerance for risk, your capacity for risk, your need for risk and your specific lifelong cash flow requirements.

Importantly, it is a long term strategic exposure that allows for both up and down markets. If your risk exposure is causing you current discomfort, it may be helpful to remind yourself that your decision to accept that risk exposure was well considered.

Every market participant is experiencing some pain from this current market downturn. Those who are hurting most are those who did not have a well considered approach to risk leading into the downturn. And those who are likely to experience most regret are those who do not have a risk exposure tailored to their circumstances and objectives when the market eventually recovers.

2. Your investment approach is applicable through all market conditions

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