Market Volatility


Well, the 5 April year-end valuation point is upon us. It will not be pleasant reading for anyone, including our clients and investors elsewhere. Markets almost unilaterally have endured the worst quarter since 1987 and there are all types of far more awful worsts/fastest/steepest that I am tiring of reading them. There have also been some of the most rapid/largest bounces too but whether these will prove to be ‘dead cat bounces’ or signifying the end of the bottom (or at least the beginning of the bottom) will only be known after the event.

So, when do you (and we), sell those assets which have withstood the ravages, to use that money to buy more of those which are most depressed or do we conserve those ‘safe’ things pending the passage of the uncertainty? These may be gold, pharmaceutical and health companies, supermarkets, tech stocks (boosted by the new working environments), currencies or food producers for example. I have to say that we have not sold those ‘protected’ holdings though we have been subscribing new cash and spare income to top-up certain holdings, buying cheaply from depressed and distressed sellers but so often, the stock isn’t there or certainly not at the prices the market is pretending to quote so we go away empty-handed.

We are now in a new tax year with new pension and ISA allowances available, so will there be avid investors desperate to commit their new cash contributions or very few brave enough to buy the value which is now almost universal because selling has not been based on fundamentals but simply the forced sales from those who have either panicked or been called-upon for cash and without enthusiastic buyers on the other sides of the deal.

Please remember that after this dreadful crisis there will still be roughly 8billion people on our planet. These people all want feeding, clothing and shelter. They want communications, energy, heating, water, travel, finance and insurance. The majority has or can afford medicine, education and care and yes, it will also entertain itself, holiday, relax, collect things, garden, visit, eat out, watch and do sports, play and attend music events. From this ‘normal’ activity, business will survive and thrive and whilst many are likely to fail from this, those who endure will be in great demand, even if people have to review their own finances and spending in terms of what they can afford and sadly there will be personal bankruptcies too.