As you know, there is seldom an obvious “right time” to invest in the stock market, but there is a natural desire to try and spot it.
As my late father told me many years ago, “when everyone starts running, I walk”. This theory makes sense in the investment world for sure, and the reverse is also true: when everyone else stops, it’s a good time to start.
On a daily basis, I will see a title contradict that of the day before: the “report on American unemployment is ugly”, followed by “the American economy rebounds sharply”.
If you have the time for this, as well as a good physiotherapist for your neck, good luck. I prefer to eat cardboard.
There is no doubt, however, that the much-appreciated UK domestic market is once again becoming a potential option. When it does, those markets will move quickly and, in the long run, investing in the UK will seem like a cheaper option today.
Hit by the Brexit fiasco, an unloved currency and a Covid adaptation strategy surpassed only by the United States in terms of ineffectiveness, UK domestic actions have come under fire.
A speech about a vaccine and such national stocks has rebounded with bargain hunters on the periphery sitting like meerkats with their noses up.
The stock markets tend to look past the current noise. As the world goes into lockdown, the stock markets have rebounded. Extraordinary. Maybe they see something else?
As for third-quarter profits, most surprised on the upside, both in terms of sales and real profits, only utilities surprising on the downside.
In a worrying market, you may not have expected this.
Consumer discretionary surprised 84.24% on the upside. These are items that are not needed and are only purchased when someone has enough money to buy them. Consider.
Communications services also surprised nearly 25% on the upside. No surprise, the communications services behaved well, but they surprised, that’s the key.
Looking at the daily cases of Covid, the number is increasing, but if you ask, more people if they have it (testing), the cases will increase. The overlay on this is Daily Global Mortality, which is pretty flat. Any sign of green growth, optimism pervades the stock. The excess mortality is above average, but nothing like the peak in April.
While this space is full of conspiracies and emotions on all sides, I have had a zoom call over the past three days with two parents and friends who have Covid. Other than a stinging cough and a positive test, they were not at all aware of their virus.
More interestingly, if one examines the evidence, the Swedish approach of prosecuting and protecting vulnerable people shows clearly positive results with virtually no excess mortality in the past three months.
If I look at global mobility (i.e. the movements of people being tracked by your phones if you leave this feature on?) In retail and leisure, as well as in grocery stores and pharmacies, statistics are rather benign. Spain fell 55% in April and the UK 33% in grocery / drug stores. It is now -2 percent and -9 percent. In terms of detail, April’s figures for the UK were -76 percent, but it’s -28 percent on October 30.
Consider also the UK household savings rate, which has exploded over the past year. 1962, 1971, 1999 and 2017 all saw historically low levels in terms of five-to-five savings rates. Wait for that. The UK savings rate now sits at 28.1 as families store nuts for the winter (a slowdown).
This is a clear sign of pent-up demand that is expected to make its way into the economy as soon as society thinks it’s more than a big bag of frogs.
Right now the UK is not loved nationally by investors and around the world by foreign investors, well aware that a currency could take a nosedive and an economy, so much so that it is trading at a significant discount compared to the rest of the world in terms of a mixture of three distinct valuation methods.
The reverse is true when it turns, with foreign investors looking for a double whammy of a growing currency added to the stock market surging.
Take the time to examine how your pension and investments are now distributed.
:: Peter McGahan is Managing Director of independent financial advisor Worldwide Financial Planning, which is authorized and regulated by the Financial Conduct Authority. For a free valuation of your pensions and investments, call Darren McKeever on 028 6863 2692, email [email protected] or visit www.wwfp.net.