With so much change in the markets just now, Douglas has provided an additional brief investment update as follows:
The US election seems to be almost settled now although it would be surprising if the Trump administration go quietly. You may have seen Donald Trump holding a press conference to take the credit for the S&P 500 reaching an historic high. We wouldn’t want to be disrespectful, but it might not be quite like that.
The recent news on vaccines is exciting news for humanity and rightly has been a huge boost for markets both US and global. Expectations of strong recovery are growing by the day for next year and beyond. What we have seen is that some sectors that have been on the ropes because of the pandemic – travel, hospitality and generally the value sector- experience rapid gains. It will be interesting to see if this trend will be sustained in preference to the high growth new technology companies. It would be hard to argue that for value companies next year will be anything but better. The UK markets have a lot of such companies and their performance through 2020 have reflected this. Right now, the UK is a bit unloved, and not helped by the lack of a deal with the EU. It is expected that a deal will be achieved which should be a boost for UK markets, but nothing can ever be taken for granted.
The shape of the US election result provides a gridlock for the President with the legislature. Markets like this gridlock. Historically, this type of outcome has been very positive for US markets with double digit returns often enjoyed. Some recent data from the US has concluded that 35% of those 65 and over sold all their equity holdings at the height of the crisis. It is thought this statistic is not confined to the US. This year has tested our investment nerves but holding firm has been rewarded and selling out certainly hasn’t.
The above article is intended to be a topical commentary and should not be construed as financial advice. Past performance is not an indicator of future returns. Any news and/or views expressed within this document are intended as general information only and should not be viewed as a form of personal recommendation.
