Over the weekend we had a “drink in the close” with our neighbours which was great fun and left me with a slight headache from sitting in the sun, at least that my story and I’m sticking to it. The point is that of the four neighbours we were chatting to, one couple both work for major corporations and are working from home, one couple are retired having worked for a company with a final salary pension scheme, a third have a personal pension in payment via drawdown and the last one where the husband is still working for a Garden Nursery and is currently furloughed. Of course, I am still working, by choice, and am able to do nearly everything I need to from home.
We all live in broadly similar houses; all have children who one way or another are still our responsibility. The kids range from those in university, just started work on a graduate scheme and one of mine who is on a zero hours contract with a pub chain. My eldest works for a government funded support group in the motor industry and one, Caroline, is in the family business. We are all concerned for not just our own position but of course what impact the current situation will have on our children.
The question that they all asked me was how long the financial markets are going to be behaving as they are, and of course the answer is that nobody really knows. I read a lot of papers being written by some of the best brains in the world of finance and investment and there is no clear consensus on how things will progress. For example, some 10 million people lost their jobs in the USA last week, even though they had the biggest bail out in history announced in the same week. This means that the newly idle in the USA are greater than the population of London. There was a piece in the times this weekend which said that according to the Corporate Finance Network between 800,000 and a million small businesses in the UK could fail in the next four weeks. Some pundits say that the only way forward is to continue with the lockdown as it is more important to solve the medical issues and then sort out the economies, whereas others say that you cannot keep on with lockdown at the expense of the economy. I am in the process of downloading the “Ruffer Report” which is 124 pages of market information looking at events such as the cold war and what impact they have had on markets, really fascinating stuff, I am looking forward to sharing their insights with all of you.
I have been tempted reduce our exposure to the USA and move into cash or even look at increasing exposure to Emerging Markets on the basis that buying into markets that have taken the greatest hits and so are cheap seems to make sense. However, on careful thought I am still against locking in what will be in the overall scheme of things short term losses.
I would like to think that many of you have become more than clients and, if we lived next door, would have joined in the drink in the close. I would say the same to you as I said to my friends and neighbours; hang tight, do not panic, and most of all make the most of the time we all have to talk to our families.
Finally if you have been considering making a will or setting up a power of attorney Caroline is now able to do this for you without actually having to meet. You can contact her at Caroline@straighttalkfinancial.co.uk
So to the markets.
|January 2nd||April 6th|
|FTSE 100||7604||5520||Down 27.4%|
|DOW JONES||28584||21052||Down 26.35%|
|S&P 500||3261||2488||Down 23.7%|
|HANG SENG||28543||23745||Down 16.8%|
|CAC 40||6037||4301||Down 28.75%|