We wish you a safe, healthy, and prosperous New Year! These words are even more meaningful given the most deadly and economically crippling ‘Black Swan’ event that we have experienced in the last century—COVID-19. After unprecedented fiscal and monetary stimulus, the record-setting development of multiple effective vaccines has elevated optimism that we will experience the ‘thrill of victory’ over this nemesis in the upcoming year.
The curtain is slowly coming down on 2020. Not before time! After what has been a tumultuous period for most, and a tragedy for many, the time to turn the page and move on is slowly arriving. Centre stage, the principal actors are going through their closing lines. Following the US elections, the leading actor refuses to go quietly into the night. Legal actions lie strewn about like discarded party poppers…
After a rough, tough performance month in the pan-European equity markets, the instinct is always to look away from the detailed data and conclude in a world of tightening pandemic restrictions and an imminent (and hotly contested) American presidential election, that uncertainty must induce investment caution.
This October marks 80 years since the opening of the Pennsylvania Turnpike, America’s first highway. Highways have been a critical driver of economic growth due to the connectivity, speed, and efficiency they provide. As Confucius so appropriately stated, “roads were made for journeys, not destinations.”
The traditional early September think piece centres on the natural reset that a generalised return to work (and for the younger generation, school) brings after the typically languid summer holiday period. As 2020 is clearly a very different style of year, let us rip up the normal script and ask the simpler question of ‘does the world feel lucky?’
Financial markets are always a three-dimensional jigsaw, with new pieces being added and deleted at whim every business day. But the signals from the last month have been especially difficult to discern. In contrast to the bounce back second quarter, July was a negative month for pan-European markets with the U.K. continuing to lag.
Whilst there are still pockets of great opportunity across the globe, the past few weeks have also seen crazy price rises of some stocks as investors have rushed to join the herds buying certain technology stocks indiscriminately. Given the backdrop of a Western World with low interest rates and a pandemic that is highly disrupting many sectors, the relatively less affected technology sector is an attractive place to park money. It seems many investors taken this view but have forgotten the importance of valuations. The herd buying has pushed prices up which then reaffirms investors reasoning so they buy more again and so on which spirals share prices upwards.
At Raymond James, Ribble Valley we have a highly bespoke investment proposition and state of the art tools. This allows us to cater for clients’ ethical preferences, however specific they are. Many people only want to profit from companies with certain characteristics and they want to make sure that their views are reflected.
At any other time, a three percent bounce during May in the pan- European (including the U.K.) equity markets and the driest fifth month of the year in large swathes of the country since 1929, would represent an ideal entry into the summer months. However – despite recent lockdown liberalisations – these are far from normal times.