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Crystal Ball Gazing

With world stock markets reacting positively to increasing signs of lockdowns being eased around the world, and with events still moving very quickly, we thought it would be a good time to summarise where we seem to be and where we might be heading from a financial standpoint.

Whilst the market corrections and movements in the last few months’ are pretty normal, the global pandemic is not. In Donald Rumsfeld’s famous words, the “known knowns” are the worldwide recessions, high unemployment and the likelihood of businesses struggling to adapt to the new world. The “known unknowns” include whether we will suffer a second wave of infections, whether and when efficient vaccines can be created and distributed and exactly how politicians and central bankers will lead the way? As always, it is the “unknown unknowns” that could be the most concerning.

All of the ‘known’ information appears to be priced in to the markets now and, as always, the focus is very many months into the future to establish a fair value for the price of shares today. The consensus appears to be that recovery is likely and will take time; there is an increasing belief that we could be currently experiencing a ‘bear-market bounce’, so even though investment growth is likely, volatility is likely to stay for a while yet. History favours the investor and below are a couple of useful examples of what I mean by this; many investors will have experienced many of these situations previously and it is encouraging to note that over time the markets have always come out stronger than when they went in.

So for anybody looking for guidance for what to do from here, my advice is to stay invested, trust in the markets and especially to stay safe.