Since our last update stock markets around the world have rallied more than 10% from their lows, proving once again the old maxim that it’s more about ‘time in the market than timing the market’. Investment conditions do remain extremely volatile and we expect to continue seeing swings each day that would in normal times be headline news.
Last week’s rousing applause for the NHS showed how much this country rightly values those key workers that are saving lives and risking their own fighting this virus on the front line. We are very aware that we don’t work for the NHS or feeding the country, but we are still part of an essential industry, and as such remain open, providing income, advice and long-term strategy for our clients.
As a business, we like many others are now fully adjusted to the ‘new normal’, with a high proportion of staff working from home. Those that must go into the office practise social distancing to stay safe. New processes have been implemented successfully and we are prioritising the safety and security of our clients and staff.
Recent news flows have been dominated by the uncertain length of time the current lockdown arrangements will exist and even the prospect of more draconian social distancing measures. Digging behind the headlines it is clear to see that science, human ingenuity and big budgets can do great things… look at the advances in technology through World War 2 and the US Space Program in the 1960s.
Yesterday it was reported that Mercedes Formula One engineers in conjunction with University College London Hospital have designed and built a device that provides oxygen to the lungs without the need for a ventilator. 40 of these devices have been built and, subject to tests over the next few days, Mercedes expect to be able to produce 1000 of them a day starting next week. Similar progress is being made on ventilator production globally, with the VentilatorChallengeUK consortium and Dyson each receiving orders for more than 10,000 from the UK government alone.
Currently there are 35 vaccines being trialled around the world and combinations of existing approved medicines that have, on small groups, brought time spent hospitalised by CoVid-19 down from 11 to 4 days, effectively more than doubling existing hospital’s capacity. Time will tell their efficacy on whole populations.
Meanwhile, governments around the world continue to stand behind their working populations and provide conditions for most to allow them and their businesses to effectively hit the pause button, ready to hit the ground running when distancing measures are relaxed.
The economic growth numbers for the next few months will be pretty ghastly, the worst since the 1940s, but we expect the downturn to be short-lived. Indeed, most commentators expect it to be followed by a strong recovery. The chart below produced by Vanguard’s own Investment Strategy Group see them predict GDP across the whole Eurozone to return to near pre-crisis levels within 3-6 months of the lockdown ending. We will soon see how accurate their forecast is.
Now is the time that investment companies earn their keep, having to quickly redefine which companies will survive and which will thrive. As one quoted ‘Any losses this year will not determine the value of a company; it is the profits that they can earn in the years to come that count.’ We continue to monitor and challenge the companies we have recommended to ensure that they are doing the right things and following the processes that have made them excel in the past.
Our advice remains consistent don’t let decisions based on short-term market conditions derail long-term plans.
Please do not hesitate to contact us if you wish to discuss this in further detail.